On January 1, 2016, MARK entered into a franchise agreement with MARIAN, Inc. to sell M&M's products. The agreement provides of an initial franchise fee of P 30,000,000, payable as follows: P 18,000,000 cash to be paid upon signing of the contract, and the balance in five equal annual payments every December 31 starting 2016. MARK signs 12% interest bearing note for the balance. The agreement further provides that the franchisor will assist the franchisee in locating the business site, designing and supervising the construction of the building, and training of management and employees. The agreement also provides that the franchisee must pay a continuing franchise fees equal to 10% of its monthly gross sales. On June 30, 2016, the franchisor completed the initial services required by the contract at a cost of P 8,000,000, of which 25% was indirect. The franchisee commenced business operations on July 5, 2014. The gross sales reported by the franchisee to the franchisor are: July sales P 150,000; August sales P 180,000; September sales P 270,000; October sales P 200,000; November sales P 580,000; and December sales P 720,000. <\/p>
REQUIRED: <\/p>
1. Compute for the net income earned during the year 2016, assuming the collectability of the note is reasonably assured <\/p>
2. Compute for the net income earned during the year 2016, assuming the collectability of the note is not reasonably assured<\/p>", "transcribed_text": "", "related_book": { "title": "Auditing and Assurance Services", "isbn": "978-1259573286, 1259573281, 978-1260152166", "edition": "7th edition", "authors": "Timothy Louwers, Allen Blay, David Sinason, Jerry Strawser, Jay Thibodeau", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/1263.jpg", "uri": "\/textbooks\/auditing-and-assurance-services-7th-edition-1263", "see_more_uri": "" }, "free_related_book": { "isbn": "1022561979", "uri": "\/textbooks\/observations-and-experiments-on-the-poison-of-lead-1st-edition-978-1022561977-266787", "name": "Observations And Experiments On The Poison Of Lead", "edition": "1st Edition" }, "question_posted": "2024-06-28 04:48:35", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/if-internal-controls-are-weak-in-what-situations-could-an", "description": "If internal controls are weak, in what situations could an audit still be done, and in what situations would it not be possible to do an audit?", "stars": 3 }, { "url": "\/study-help\/psychology\/explain-major-techniques-that-a-clinician-may-use-during-a-1983077", "description": "Explain major techniques that a clinician may use during a clinical interview.", "stars": 3 }, { "url": "\/recognizing-cash-flows-for-capital-investment-projects-npv-metall-manufacturing", "description": "Recognizing cash flows for capital investment projects, NPV. Met-All Manufacturing manufactures over 20,000 different products made from metal, including building materials, tools, and furniture...", "stars": 3 }, { "url": "\/study-help\/questions\/which-of-the-following-is-not-a-goal-of-risk-9850599", "description": "Which of the following is NOT a goal of risk management? A) Measuring risk exposures B) Eliminating exposure to risk C) Defining the level of risk appetite", "stars": 3 }, { "url": "\/study-help\/questions\/im-needing-help-preparing-a-2109-tax-return-on-this-6971688", "description": "I'm needing help preparing a 2109 tax return on this? Samson, a world renowned strong man and athlete, is employed as an owner and a trainer for his business \"FeelFit Health Club\". To some people, he...", "stars": 3 }, { "url": "\/study-help\/questions\/it-is-intellectually-simple-to-formulate-an-elegant-strategy-but-1003179", "description": "It is intellectually simple to formulate an elegant strategy but not so with its implementation. Discuss", "stars": 3 }, { "url": "\/study-help\/questions\/consider-the-following-project-where-times-are-in-weeks-activity-1007595", "description": "Consider the following project where times are in weeks. Activity Immediate Predecessors Duration A - 8 B - 12 C A,B 7 D B 4 AND A 2 F C 3 G E,F 7 H D,F 3 what is the early start for activity B using...", "stars": 3 }, { "url": "\/study-help\/questions\/rs-direct-materials-25000-indirect-materials-5000-direct-labour-30000-1004128", "description": "Rs. Direct materials 25,000 Indirect materials 5,000 Direct labour 30,000 Indirect labour 4,500 Factory overhead (excluding indirect materials and indirect labour) 15,000 Plant cost Required: Compute...", "stars": 3 }, { "url": "\/study-help\/questions\/yousif-and-his-partner-hussain-have-decided-to-become-a-1007522", "description": "Yousif and his partner Hussain have decided to become a non-store retailer and would like to open a web-based retail store called Dee ReeTee which is specialized in selling unisex caps, hoodies, and...", "stars": 3 }, { "url": "\/study-help\/questions\/some-health-care-facilities-have-initiated-senior-nursenew-graduate-nurse-1007028", "description": "Some health care facilities have initiated senior nurse\/new graduate nurse mentoring programs in which junior staff receive informal advice and assistance from experienced staffers. Name the...", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/when-accounts-receivable-is-increasing-does-allowance-for-doubtful-debt-4243169", "next": "\/study-help\/questions\/neve-commercial-bank-case-analysis-1neve-commercial-bank-is-the-4243171" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "On January 1, 2016, MARK entered into a franchise agreement with MARIAN,", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/on-january-1-2016-mark-entered-into-a-franchise-agreement-4243170" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } } "1" } }