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Sweet Universe charges an initial franchise fee of $306,000. Upon the signing of the agreement, a payment of $34.000 is due. Thereafter, 5 annual payments
Sweet Universe charges an initial franchise fee of $306,000. Upon the signing of the agreement, a payment of $34.000 is due. Thereafter, 5 annual payments of $54.400 are required. The credit rating of the franchisee is such that it would have to pay interest at 9% to borrow money. The franchise agreement is signed on August 1, 2020, and the franchise commences operation on October 1. 2020 Click here to view factor table. Prepare the journal entries in 2020 for the franchisor under the following assumptions. No future services are required by the franchisee once the franchise starts operations. (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 for the amounts. Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to decimal places eg. 58,971.) Date Account Titles and Explanation Debit Credit
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