What is the amount of unearned franchise fee

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Problem - Forever, Inc. granted a franchise to Hopeless Romantic for the manila area. The franchise was to pay a franchise fee of P250,000, payable in five equal annual installments starting with the payment upon signing of the agreement. The franchise was to pay monthly 3% of gross sales of the preceding month. Should the operations of the outlet prove to be unprofitable, the franchise may be canceled with whatever obligations owing Forever, Inc. in interest bearing note is 14%. The first year generated a gross sales of P1250,000. What is the amount of unearned franchise fee after the first year of operations?

Reference no: EM132839740

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