Year-Round Golf sells franchises for indoor golf driving ranges and putting greens. For each franchise, the company charges a nonrefundable initial franchise fee of $45,000. The franchise agreement requires a down payment of $10,000, with the balance covered by the issuance of a $35,000, 10% note, payable by the franchisee at the end of five years. Interest does not begin to accrue until the franchise opens, and the first interest payment is required 12 months after the franchise opens. The company sells only to qualified buyers so the collectibility of the note is always reasonably assured. The services required for the initial franchise fee are completed six months after the agreement is signed.

The franchisee is also required to pay a continuing fee of $6,000 per year, plus 10% of its gross sales. Half the $6,000 is applied against purchases of supplies from the franchisor, which are paid for in cash at the time of purchase. The franchisor charges a sales price of 50% above its cost on these supplies.

In the first six months of 2007, the company sold four franchises which began operating at the end of December. These franchisees had sales of $160,000 in 2008, and purchased the allowable amount of supplies. In the second six months of 2007, the company sold one franchise which began operating on April 1, 2008. The franchisee had sales of $25,000 in 2008 and purchased $1,500 of supplies.

Required

Prepare the journal entries required by Year-Round Golf in 2007 and 2008 to record the preceding events.