How do prepare entries on the books of franchisor to record

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Reference no: EM132707664

Pancake House sells franchises for an initial fee of P432,000. The initial fee covers site selection, training, computer and accounting software, and on-site consulting and troubleshooting, as needed, over the first five years. On March 15, 2019, Local Pancake signed a franchise contract, paying the standard P72,000 down with the balance due over 5 years with interest.

Assume at March 15, 2019, the time of signing the contract, collectability of the receivable was reasonably assured and there were no significant continuing obligations. The agreement provides that Pancake has the option to purchase within five years to acquire franchisee's business and it seems certain that Pancake's House will exercise the option.

Required:

Problem 1: Prepare entries on the books of franchisor to record the above transactions.

Reference no: EM132707664

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