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E18-27B (Franchise Entries)Burger Universe charges an initial franchise fee of $225,000. Upon the signing of the agreement, a payment of $25,000 is due. Thereafter, five annual payments of $40,000 are required. The credit rating of the franchisee is such

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E18-27B (Franchise Entries)Burger Universe charges an initial franchise fee of $225,000. Upon the signing of the agreement, a payment of $25,000 is due. Thereafter, five annual payments of $40,000 are required.;The credit rating of the franchisee is such that it would have to pay interest at 12% to borrow money.;Instructions;Prepare the entries to record the initial franchise fee on the books of the franchisor under the following assumptions.;(a) The franchisor has minimal services to perform, the down payment is not refundable, and the collection of the note is certain.;(b) The down payment is not refundable, substantial future services are required by the franchisor, and collection of the note is reasonably certain.;(c) The down payment is not refundable, collection of the note is reasonably certain, the franchisor has performed approximately one-half of the required services.

 

Paper#75338 | Written in 18-Jul-2015

Price : $27
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