Reference no: EM132774687

On january 1, 2020, zola robinson signed a ten-year franchise agreement that gave her the exclusive rights to sell exclaim donuts in halifax, nova scotia. the terms of the agreement required zola to pay the franchisor $24,000 upon signing the agreement and an ongoing royalty of 7% of net annual sales payable on the 15th of the month following year-end. Zola must also contribute 5% of her net sales to the exclaim sales and marketing fund, again, payable on the 15th of the month following year-end. zola amortizes the franchise agreement on a straight-line basis. her net sales for the 2020 totalled $1,000,000.

Problem a. Assuming that Zola prepares adjusting entries only at year-end, prepare the required journal entries for 2020

1. Journalize the amortization expense on the franchise agreement.
2. Prepare journal entries for the royalty fee.
3. prepare journal entries for the sales and marketing expense.

Problem b. prepare journal entries to record the payment of the franchise and marketing fees in 2021.