Question

Oriole Delight, Inc. charges an initial franchise fee of $75,000 for the right to operate as a franchisee of Oriole Delight. Of this amount, $25,100 is collected immediately. The remainder is collected in four equal annual installments of $12,475 each. These installments have a present value of $41,238. As part of the total franchise fee, Oriole Delight also provides training (with a fair value of $2,000) to help franchisees get the store ready to open. The franchise agreement is signed on April 1, 2020, training is completed, and the store opens on July 1, 2020.

Prepare the journal entry required by Oriole Delight in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
April 1, 2020July 1, 2020	enter an account title for the journal entry on April 1, 2017	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on April 1, 2017	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on April 1, 2017	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on April 1, 2017	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on April 1, 2017	enter a debit amount	enter a credit amount
April 1, 2020July 1, 2020	enter an account title for the journal entry on July 1, 2017	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on July 1, 2017	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on July 1, 2017	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on July 1, 2017	enter a debit amount	enter a credit amount

Answer 1

Answer
Date	Account titles and explanation	Debit	Credit
April 1, 2020	Cash	$     25,100
	Notes Receivable ($75,000 – $25,100)	$     49,900
	Discount on Notes Receivable		$       8,662
	Unearned Service Revenue (Training)		$       2,000
	Unearned Franchise Revenue ($25,100 + $41,238 - $2,000)		$     64,338
July 1, 2020	Unearned Service Revenue (Training)	$       2,000
	Unearned Franchise Revenue	$     64,338
	Franchise Revenue		$     64,338
	Service Revenue (Training)		$       2,000