Exercise 18-39 On January 1, 2017, Lesley Benjamin signed an agreement, covering 5 years, to operate as a franchisee of Vaughn Inc. for an initial franchise fee of $58,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $9,800 each, beginning January 1, 2018. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2017. Lesley Benjamin's credit rating indicates that she can borrow money at 7% for a loan of this type. Your answer is correct. Prepare journal entries for Vaughn for 2017-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the 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. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g.58,971 Date Account Titles and Explanation Debit Credit Jan. 1, 2017 Cash 9000 Notes Receivable 49000 Discount on Notes Receivable 8818 Unearned Franchise Revenue 49182 Apr. 1, 2017 Unearned Franchise Revenue 49182 Franchise Revenue 49182 Dec. 31, 2017Discount on Notes Receivable 2813 Interest Revenue 2813 SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Your answer is partially correct. Try again. Prepare journal entries for Vaughn for 2017-related revenue for this franchise arangement, assuming that in addition to the franchise rights, Vaughn also provides 1 year of operational consulting and training services, beginning on the signing date. These services have a value of $2,900. (Credit account titles are automatically indented when the 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. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971.) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 Cash 9000 Notes Receivable 49000 Discount on Notes Receivable Unearned Service Revenue 2900 Unearned Franchise Revenue Apr. 1, 2017 Unearned Service Revenue Unearned Franchise Revenue Franchise Revenue Service Revenue Dec. 31, 2017 Unearned Service Revenue Service Revenue To record service revenue) Discount on Notes Receivable Notes Receivable 49000 Discount on Notes Receivable Unearned Service Revenue 2900 Unearned Franchise Revenue Apr. 1, 2017 Unearned Service Revenue Unearned Franchise Revenue Franchise Revenue Service Revenue Dec. 31, 2017 Unearned Service Revenue Service Revenue (To record service revenue) Discount on Notes Receivable Interest Revenue To record interest revenue) SHOW LIST OF ACCOUNTS SHOW SOLUTION Your answer is partially correct. Try again. Repeat the requirements for part (a), assuming that Vaughn must provide services to Benjamin throughout the franchise period to maintain the franchise value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g.1.25124 and the final answer to O decimal places e.g. 58,971.) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 Cash Notes Receivable Discount on Notes Receivable Dec. 31, 2017 Unearned Franchise Revenue 9836 Franchise Revenue To record service revenue) Discount on Notes Receivable 9836 2813 Interest Revenue 2813 To record interest revenue) SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT
