Sheridan Crossburgers Inc. charges an initial franchise fee of $75,000. Upon the signing of the agreement (which covers 3 years after commencement of operations), a payment of $30,000 is due. Thereafter, 3 annual payments of $15,000 are required. The credit rating of the franchisee is such that it would have to pay interest at 9% to borrow money. The franchise agreement is signed on May 1, 2025, and the franchise commences operation on July 1, 2025. Click here to view the factor table. Prepare the journal entries in 2025 for the franchisor under the following assumptions. a. No future services are required by the franchisor once the franchise starts operations. b. The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise. c The total franchise fee includes training services (with a value of $2,900) for the period leading up to the franchise opening and for 2 months following opening. (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, eg 1.25124 and the final answer to O decimal places eg. 58,971. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) No. Date Account Titles and Explanation Debit (e) (b) (c)
Sheridan Crossburgers Inc. charges an initial franchise fee of $75,000. Upon the signing of the agreement (which covers 3 years after commencement of operations), a payment of $30,000 is due. Thereafter, 3 annual payments of $15,000 are required. The credit rating of the franchisee is such that it would have to pay interest at 9% to borrow money. The franchise agreement is signed on May 1, 2025, and the franchise commences operation on July 1, 2025. Click here to view the factor table. Prepare the journal entries in 2025 for the franchisor under the following assumptions. a. No future services are required by the franchisor once the franchise starts operations. b. The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise. c The total franchise fee includes training services (with a value of $2,900) for the period leading up to the franchise opening and for 2 months following opening. (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, eg 1.25124 and the final answer to O decimal places eg. 58,971. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) No. Date Account Titles and Explanation Debit (e) (b) (c)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheridan Crossburgers Inc. charges an initial franchise fee of $75,000. Upon the signing of the agreement (which covers 3 years after
commencement of operations), a payment of $30,000 is due. Thereafter, 3 annual payments of $15,000 are required. The credit rating
of the franchisee is such that it would have to pay interest at 9% to borrow money. The franchise agreement is signed on May 1, 2025.
and the franchise commences operation on July 1, 2025.
Click here to view the factor table.
Prepare the journal entries in 2025 for the franchisor under the following assumptions.
b.
No future services are required by the franchisor once the franchise starts operations.
The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the
franchise.
C
The total franchise fee includes training services (with a value of $2,900) for the period leading up to the franchise opening
and for 2 months following opening.
(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 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.)
No.
Date
Account Titles and Explanation
Debit
(a)
(b)
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List of Accounts
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