(b)Prepare journal entries for Blossom for 2025-related revenue for this franchise arrangement, assuming that in addition to the franchise rights, Blossom also provides 1 year of operational consulting and training services, beginning on the signing date. These services have a value of $3,500. (Credit account titles are automatically indented when theamount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971. List all debit entries before credit entries. Record journal entries in the order presented in the problem.)DateAccount Titles and ExplanationDebitCredit On January 1, 2025, Mary Johnson signed an agreement, covering 5 years, to operate as a franchisee of Blossom Inc. for an initial franchise fee of $50,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $8,200 each, beginning January 1, 2026. The agreement provides that thedown payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Mary Johnson's credit rating indicates that she can borrow money at 8% for a loan of this type.Click here to view the factor table.(a)Your answer is correct.Prepare journal entries for Blossom for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 andthe final answer to O decimal places e.g. 58,971. List all debit entries before credit entries.)DateJan. 1, 2025Apr. 1, 2025Dec 31, 2025 vAccount Titles and ExplanationCashNotes ReceivableDiscount on Notes ReceivableUnearned Franchise RevenueUnearned Franchise RevenueFranchise RevenueDiscount on Notes ReceivableInterest RevenueDebit900041000417402619Credit826041740417402619

A method of selling products and services that are based on a relationship between the local…

Answered: On January 1, 2025, Mary Johnson signed…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2020, Flower Corp. enters into an agreement with Nicki Rentals Inc. to lease a machine from them. Both corporations adhere to ASPE. The following data relate to the agreement:(i) The term of the non-cancellable lease is three years with no renewal option. Payments of $ 543,244 are due on December 31 of each year.(ii) The fair value of the machine on January 1, 2020, is $ 1,400,000. The machine has a remaining economic life of 10 years, with no residual value. The machine reverts to the lessor upon the termination of the lease.(iii) Flower depreciates all its machinery on a straight-line basis. (iv) Flower’s incremental borrowing rate is 10%. Flower does not have knowledge of the 8% implicit rate used by Nicki. (v) Immediately aftersigning the lease, Nicki discovers that Flower is the defendant in a lawsuit that is sufficiently material to make collectability of future lease payments doubtful. From Flower’s viewpoint, what type of lease is this?…
On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $96,000 each, beginning December 31, 2024, and on each December 31 through 2026. The lessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 5%. Winn also paid a $321,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $417,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year is the calendar year. Note: If no entry is required for a transaction/event,…
On January 1, 2021, a company obtained a franchise from a famous fast-food chain to sell for 20 years the fast-food's products. The initial franchise fee as agreed upon shall be P6,000,000: payable in cash of P1,000,000 when the contract is signed and the balance in four equal installments, thereafter, as evidenced by a non-interest-bearing note. The prevailing interest rate for this type of note is 12%. The agreement provides that the franchisor shall provide the necessary initial services required under a franchise contract. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor. Revenue from the franchise for 2021 was P5,000,000. 1. How much is the initial cost of the franchise? a. P6.000,000b. P4,796.625c. P4,177.500 d. P3,796.625 2. How much is the total amount charged against revenues for the year 2021?a. P458.875 b. P239.831 c. P945.426d. P489.831
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On December 31, 2023, Sablok Company sells production equipment to Tang Inc. for $50,000. Sablok includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2023. Sablok estimates the prices to be $48,800 for the equipment and $1,200 for the cost of warranty. Instructions Are the sale of the equipment and the warranty separate performance obligations within the contract? Explain. Prepare a single compound journal entry to record this transaction on December 31, 2024. Ignore any related cost of goods sold entry. Repeat the requirements for part (b), assuming that, in addition to the assurance warranty, Sablok sold an extended warranty (service-type warranty) for an additional two years (2024–2025) for $800. (Hint: Use unearned revenue).
Dominador's Pizza Inc. enters into a franchise agreement on December 31, 20x7 giving Doming Corp. the right to operate as a franchisee of Dominador's Pizza for 5 years. Dominador's charges Doming an initial franchise fee of P475,000 for the right to operate as a franchisee. Of this amount, P190,000 is payable when Doming Corp. signs the agreement, and the balance is payable in five annual payments of P57,000 each on December 31 Consider the following for allocation of the transaction price at December 31, 20x7. Rights to the trade name, market area, technical and proprietary know-how……………………………….…......P190,000.00 Services-training, etc………………………………………...94,591.50 Machinery and equipment, etc. (costing, P95,000)……..133,000.00 Total transaction price…………………………………….. P417,591.50 The credit rating of Doming indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual receipts of P57,000 each discounted at 8% is P227,591.50. The discount of…
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