On January 1, 20x4 Ehtelmea Dulva Dairy Treats, Inc. entered into a franchise agreement with a company allowing the company to do business under Ethelmea Dulva Dairy Treats’s name. Ethelmea Dulva Dairy Treats had performed all required services by January 1, 20x4, and the franchisee paid the initial franchisee fee of P560,000 in full on that date. The franchise agreement specifies that the franchisee must pay a continuing fee of P48,000 annually, of which 20% must be spent on advertising by Ethelmea Dulva Dairy Treats. What entry should Ethelma Dulva Dairy Treats make on January 1, Initial franchise fee and the continuing franchise fee for 20x4? DR Cash 608,000 CR Franchise Fee Revenue 560,000 CR Unearned Franchise revenue 48,000 DR Cash 608,000 CR Unearned franchise revenue 608,000 DR Cash 608,000 CR Franchise revenue 560,000 CR Unearned franchise revenue 38,400 CR Revenue from Continuing Franchise Fees 9,600 DR Prepaid advertising 9,600 DR Notes receivable 608,000 CR Franchise revenue 560,000 CR Revenue from Continuing Franchise Fees 48,000 CR Unearned Franchise Fees 9,600
On January 1, 20x4 Ehtelmea Dulva Dairy Treats, Inc. entered into a franchise agreement with a
company allowing the company to do business under Ethelmea Dulva Dairy Treats’s name. Ethelmea
Dulva Dairy Treats had performed all required services by January 1, 20x4, and the franchisee paid
the initial franchisee fee of P560,000 in full on that date. The franchise agreement specifies that the
franchisee must pay a continuing fee of P48,000 annually, of which 20% must be spent on advertising
by Ethelmea Dulva Dairy Treats. What entry should Ethelma Dulva Dairy Treats make on January 1,
Initial franchise fee and the continuing franchise fee for 20x4?
DR Cash 608,000
CR Franchise Fee Revenue 560,000
CR Unearned Franchise revenue 48,000
DR Cash 608,000
CR Unearned franchise revenue 608,000
DR Cash 608,000
CR Franchise revenue 560,000
CR Unearned franchise revenue 38,400
CR Revenue from Continuing Franchise Fees 9,600
DR Prepaid advertising 9,600
DR Notes receivable 608,000
CR Franchise revenue 560,000
CR Revenue from Continuing Franchise Fees 48,000
CR Unearned Franchise Fees 9,600
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