Pharoah Delight, Inc. charges an initial franchise fee of
$74,400 for the right to operate as a franchisee of Pharoah
Delight. Of this amount, $24,800 is collected immediately. The
remainder is collected in four equal annual installments of $12,400
each. These installments have a present value of $41,497. As part
of the total franchise fee, Pharoah 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 Pharoah 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 |
|
|---|---|---|---|---|
|
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 |
||
|
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 |
| Date | Account Titles and Explanations | Debit | Credit |
| April 1,2020 | Cash | $24,800 | |
| Notes Receivable ($12,400 × 4 installment) | $49,600 | ||
| Discount on Notes Receivable ($49,600 - $41,497) | $8,103 | ||
| Unearned Service Revenue | $2,000 | ||
| Unearned Franchise Revenue ($24,800 - $2,000 + $41,497) | $64,297 | ||
| (Being cash collected and note Receivable is recorded) | |||
| July 1,2020 | Unearned Service Revenue | $2,000 | |
| Unearned Franchise Revenue | $64,297 | ||
| Franchise Revenue | $64,297 | ||
| Service Revenue | $2,000 | ||
| (Being Franchise and service revenue are recorded) |
Get Answers For Free
Most questions answered within 1 hours.