Flapper Jack's Pancake Restaurants Inc. sells franchises for an initial fee of $37,000 plus operating fees of $600 per month. The initial fee covers site selection, training, computer and accounting software, and on-site consulting and troubleshooting, as needed, over the first five years. On March 15, 2020, Tim Cruise signed a franchise contract, paying the standard $6,200 down with the balance due over five years with interest. Assume at March 15, 2020, the time of signing the contract, collection of the receivable was reasonably assured and there were no significant continuing obligations. The journal entry at signing would include a:

Multiple Choice

• Credit to deferred revenue for $37,000.

• Credit to franchise fee revenue for $37,000.

• Credit to deferred revenue for $32,400.

• Credit to franchise fee revenue for $10,800.