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On January 1, 2020, Lesley Benjamin signed an agreement, covering 5 years, to operate as a franchisee of Kingbird Inc. for an initial franchise fee of $48,000. The amount of $11,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $7,400 each, beginning January 1, 2021. 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, 2020. Lesley Benjamin's credit rating indicates that she can borrow money at 12% for a loan of this type. Click here to view factor table. Prepare journal entries for Kingbird for 2020-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 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.) Account Titles and Explanation Debit Credit Date Jan 1, 2020 Cash Notes Receivable Discount on Notes Receivable Revenue from Franchise Fees Cash Notes Receivable Discount on Notes Receivable Revenue from Franchise Fees e Textbook and Media List of Accounts Prepare journal entries for Kingbird for 2020-related revenue for this franchise arrangement, assuming that in addition to the franchise rights, Kingbird also provides 1 year of operational consulting and training services, beginning on the signing date. These services have a value of $4,600. (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 0 decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit Date Jan. 1, 2020 Apr. 1, 2020 Dec. 31, 2020 (To record service revenue) (To record interest revenue) Repeat the requirements for part (a), assuming that Kingbird 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 0 decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit Date Jan. 1, 2020 Dec. 31, 2020 (To record franchise revenue) (To record interest revenue) On January 1, 2020, Lesley Benjamin signed an agreement, covering 5 years, to operate as a franchisee of Kingbird Inc. for an initial franchise fee of $48,000. The amount of $11,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $7,400 each, beginning January 1, 2021. 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, 2020. Lesley Benjamin's credit rating indicates that she can borrow money at 12% for a loan of this type. Click here to view factor table. Prepare journal entries for Kingbird for 2020-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 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.) Account Titles and Explanation Debit Credit Date Jan 1, 2020 Cash Notes Receivable Discount on Notes Receivable Revenue from Franchise Fees Cash Notes Receivable Discount on Notes Receivable Revenue from Franchise Fees e Textbook and Media List of Accounts Prepare journal entries for Kingbird for 2020-related revenue for this franchise arrangement, assuming that in addition to the franchise rights, Kingbird also provides 1 year of operational consulting and training services, beginning on the signing date. These services have a value of $4,600. (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 0 decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit Date Jan. 1, 2020 Apr. 1, 2020 Dec. 31, 2020 (To record service revenue) (To record interest revenue) Repeat the requirements for part (a), assuming that Kingbird 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 0 decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit Date Jan. 1, 2020 Dec. 31, 2020 (To record franchise revenue) (To record interest revenue)
