Make entries on the book of franchisor to record transaction

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Reference no: EM132713923

MacDonald, Inc. charges P108,000 for a franchise, with P21,600 paid when the agreement is signed and the balance in four annual payments. The present value of the annual payments, discounted at 9%, is P69,978. The franchisee has the right to purchase P24,000 of equipment for P19.200. If the collectability of the payments is reasonably assured, and substantial performance by MacDonald, Inc. has occurred.

Required:

Problem 1: Make entries on the books of franchisor to record the above transaction.

Reference no: EM132713923

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