What is the entry of cebu lechon on january

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Reference no: EM132727177

Problem 1: On January 2, 2013, Ms. Jenny Lopez signed an agreement to operate as a franchisee of Cebu Lechon, Inc., for an initial franchise fee of P3,125,000 for 10 years. Of this amount, 40% was paid when the agreement was signed and the balance payable in four semi- annual payments beginning June 30, 2013. Ms. Jenny Lopez issued a non-interest note for the balance. Credit rating of Ms. Jenny indicates that it can borrow money at 24% on the loan of this type. Present value factor of the note is 0.34. Cebu Lechon rendered the services required in the contract at a cost of P802,500. Ms. Jenny Lopez commenced business operations on March 1, 2013. The collection of the note of Ms. Jenny is not reasonable assured. What is the entry of Cebu Lechon on January 2, 2013 to record the receipt of the initial franchise fee from Ms. Jenny?

Reference no: EM132727177

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