Interest due annually on march 31 weston recorded the

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interest due annually on March 31. Weston recorded the $400,000 initial franchise fee as revenue on April 1, 2010. On December 30, 2010, the franchisee decided not to open an outlet under Weston's name. Weston canceled the franchisee's note and refunded $128,000, less accrued interest on the note, of the $240,000 paid on April 1. What entry should Weston make on December 30, 2010? a. Loss on Repossessed Franchise ......................................... 128,000 Cash ......................................................................... 128,000 b. Loss on Repossessed Franchise ......................................... 118,400 Cash ......................................................................... 118,400 c. Loss on Repossessed Franchise ......................................... 278,400 Cash ......................................................................... 118,400 Note Receivable ....................................................... 160,000 d. Revenue from Franchise Fees ............................................. 400,000 Interest Income ........................................................ 9,600 Cash ......................................................................... 118,400 Note Receivable ....................................................... 160,000 Revenue from Repossessed Franchise ................... 112,000 18 - 24
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Revenue Recognition *106. On January 1, 2010 Dairy Treats, Inc. entered into a franchise agreement with a company allowing the company to do business under Dairy Treats's name. Dairy Treats had performed substantially all required services by January 1, 2010, and the franchisee paid the initial franchise fee of $560,000 in full on that date. The franchise agreement specifies that the franchisee must pay a continuing franchise fee of $48,000 annually, of which 20% must be spent on advertising by Dairy Treats. What entry should Dairy Treats make on January 1, 2010 to record receipt of the initial franchise fee and the continuing franchise fee for 2010? a. Cash .................................................................................... 608,000 Franchise Fee Revenue ........................................... 560,000 Revenue from Continuing Franchise Fees ............... 48,000 b. Cash .................................................................................... 608,000 Unearned Franchise Fees ........................................ 608,000 c. Cash .................................................................................... 608,000 Franchise Fee Revenue ........................................... 560,000 Revenue from Continuing Franchise Fees ............... 38,400 Unearned Franchise Fees ........................................ 9,600 d. Prepaid Advertising .............................................................. 9,600 Cash .................................................................................... 608,000 Franchise Fee Revenue ........................................... 560,000 Revenue from Continuing Franchise Fees ............... 48,000 Unearned Franchise Fees ........................................ 9,600 *107. Wynne Inc. charges an initial franchise fee of $920,000, with $200,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is $545,872. The franchisee has the option to purchase $120,000 of equipment for $96,000. Wynne has substantially provided all initial services required and collectibility of the payments is reasonably assured. The amount of revenue from franchise fees is a. $200,000. b. $721,872. c. $745,872. d. $920,000. Use the following information for questions 108 and 109. On May 1, 2010, TV Inc. consigned 80 TVs to Ed's TV. The TVs cost $270. Freight on the shipment paid by Ed’s TV was $600. On July 10, TV Inc. received an account sales and $12,900 from Ed's TV. Thirty TVs had been sold and the following expenses were deducted: Freight $600 Commission (20% of sales price) ? Advertising 390 Delivery 210 *108. The total sales price of the TVs sold by Ed's TV was 18 - 25
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