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.
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 23P: Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to...
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