Prepare the journal entries for the franchisor

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Question - Pacific Crossburgers Inc. charges an initial franchise fee of $49,000. Upon the signing of the agreement (which covers 3 years), a payment of $19,600 is due. Thereafter, three annual payments of $9,800 are required. The credit rating of the franchisee is such that it would have to pay interest at 11% to borrow money. The franchise agreement is signed on May 1, 2014, and the franchise commences operation on July 1, 2014.

Prepare the journal entries in 2014 for the franchisor under the following assumptions.

Reference no: EM132031406

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