MIKE restaurant sold a fast food restaurant franchise to Irish. The sale agreement, signed in January 2020 called for a P100.000 down payment plus two P50,000 annual payments representing the value of initial franchise services rendered by MIKE restaurant. In addition, the agr
MIKE restaurant sold a fast food restaurant franchise to Irish. The sale agreement, signed in January 2020 called for a P100.000 down payment plus two P50,000 annual payments representing the value of initial franchise services rendered by MIKE restaurant. In addition, the agr
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 24E: Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January...
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Question
MIKE restaurant sold a fast food restaurant
franchise to Irish. The sale agreement, signed
in January 2020 called for a P100.000 down
payment plus two P50,000 annual payments
representing the value of initial franchise
services rendered by MIKE restaurant. In
addition, the agreement required the
franchisee to pay 8% of its gross revenues to
the franchisor. The restaurant opened early in
2020 and its sales for the year amounted to
P750,000. The prevailing rate for the similar
note was 12% (PV factor was 1.6901).
a. How much is the Franchise Revenue for
2020?
b. How much is the Continuing Franchise Fee
for 2020?
C. How much is the TOTAL Revenue for
2020?
d. Journal Entries on January, Upon Opening
of Franchise and December 31.
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