On apr 1 2008 ob company entered into a 10 yearfranchise, Ask an Expert

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On Apr 1 2008, OB Company entered into a 10 yearfranchise agreement with a group of individuals. The firm recevies a$300000 initial franchise fee & agrees to assist in the designof the building, help secure financing & provide managementadvice over the 1st half of the franchise agreement.A down payment of 20% of the franchise fee is due onApr 1 2008.

The remaining 80% is to be payable in 8 equalinstallments beginning on Apr 1 2009. Assume that services to beperformed by OB Company between Apr 1 2008 & Aug 15 2008, thedate the franchise opened, are substantial & that theinstallment receivable is reasonably collectible. Also assume thatsubstantial performance of the intial services has occured as ofAug 15 2008.

Prepare the necessary journal entries for OBCompany for April 1 & 15 2008.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9796691

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