PROBLEM 7-6 Bin Tai Fung entered into a franchise agreement with CAFamilia on January 1, 2019. The initial franchise fee is P9,500,000 of which P1,500,000 is payable upon signing the contract and the balance is covered by a non-interest bearing note payable in four equal annual instalments starting Dec. 31, 2019. The down payment is non-refundable. The contract also includes a 5% royalty fee based on average sales for the year. CAFamilia estimated that they can borrow at the rate of 7% (round off PV factor to 2 decimal places). The franchisee commenced its operations on June 30, 2019. For the year 2019, CAFamilia reported average monthly sales of P80,000. The collectability of the note is reasonably certain. Required. Give all the entries required to record the transactions from the date of signing the contract to December 31, 2019.

PROBLEM 7-6 Bin Tai Fung entered into a franchise agreement with CAFamilia on January 1, 2019. The initial franchise fee is P9,500,000 of which P1,500,000 is payable upon signing the contract and the balance is covered by a non-interest bearing note payable in four equal annual instalments starting Dec. 31, 2019. The down payment is non-refundable. The contract also includes a 5% royalty fee based on average sales for the year. CAFamilia estimated that they can borrow at the rate of 7% (round off PV factor to 2 decimal places). The franchisee commenced its operations on June 30, 2019. For the year 2019, CAFamilia reported average monthly sales of P80,000. The collectability of the note is reasonably certain. Required. Give all the entries required to record the transactions from the date of signing the contract to December 31, 2019.

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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