Prepare all related journal entries for the year

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At the beginning of the current year, ABC Co purchased a franchise from Mc Donut Co, to sell the Co's products for a period of 10 years amounting to P4,000,000. ABC is to initially pay P500,000 for the initial franchise fee with the balance to be paid in 5 equal annual payments of P923,291.18 every December 31. ABC can borrow a similar loan of this type at 10% for 5 years. ABC also agrees to pay the franchisor a continuing franchise fee of 10% of their annual sales. The franchise was granted on January 1 and operations started on February 1, generating sales amounting to P10,000,000.

Problem 1: Prepare all related journal entries for the year.

Reference no: EM132622468

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