Question

Journal entry worksheet < 1 > Record the sale of a franchise to Dan Perkins on July 1, 2018. Note: Enter debits before credits. Date General Journal Debit Credit July 01, 2018 Record entry Clear entry View general journal

Answer 1

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1) Calculate the standalone selling price of the five year right in the following marmer Particulars Amount Total franchise amount $ 760.000 Training cost ($18,200) Building equipment cost (5 378.000) Stand alone selling price $ 163,800 Therefore, the stand alone selling price ofthe five yearis $163.800 2) Preparejournal entry to record the sale offranchise in the following manna Credit Date July 01 2018 Particulars Cash Note receivable Deferred Reveme (Beginning record the sale offranchise) Debit $91,000 $669,000 $760,000 The business will commence in September 01. Therefore the contract obligation is notperformed in July and the revenue is recorded as deferred revenue 3) Calculate the total revenue to be recognized in the year ended December 31, in the following manner Total revemue recognized = [Reveme recognized on September01+Revenue recognized on December 31] =$596,200+$ 10,920=$ 607,120 Therefore the total rerenue to be recognized in the year ended December 31 is $ 607,120 Working Note-1 : Revenue recognized on September 01=Training cost+Building and equipment cost = $18,200 + $ 578,000 = $ 596,200 Revenue recognized on December 31 = [Standalone selling price of the five yearsight* (Number of months elapsed/Total duration of rights)] = $ 163,800x [4/5 yearsx 12 months)] = $ 10.920