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    Problem 3

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    Frhea Love Abello
    Jollibee sells a franchise requiring an initial fee of P840,000, with P240,000 paid in cash and the remaining P600,000 covered by a 10% note payable over 5 years. The summary provides the journal entries for Jollibee under different scenarios regarding performance of services, expiration of the refund period, and collectability of the note.

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    Problem 3

    Uploaded by

    Frhea Love Abello
    50 views3 pages
    Jollibee sells a franchise requiring an initial fee of P840,000, with P240,000 paid in cash and the remaining P600,000 covered by a 10% note payable over 5 years. The summary provides the journal entries for Jollibee under different scenarios regarding performance of services, expiration of the refund period, and collectability of the note.

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    Problem-3

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    Jollibee sells a franchise requiring an initial fee of P840,000, with P240,000 paid in cash and the remaining P600,000 covered by a 10% note payable over 5 years. The summary provides the journal entries for Jollibee under different scenarios regarding performance of services, expiration of the refund period, and collectability of the note.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    50 views3 pages

    Problem 3

    Uploaded by

    Frhea Love Abello
    Jollibee sells a franchise requiring an initial fee of P840,000, with P240,000 paid in cash and the remaining P600,000 covered by a 10% note payable over 5 years. The summary provides the journal entries for Jollibee under different scenarios regarding performance of services, expiration of the refund period, and collectability of the note.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Problem #3

    Assume that the Jollibee Company sells a franchise that requires an initial franchise fee of P840,
    000. A down payment of P240, 000 cash is required, with the balance covered by the issuance of
    a P600,000. 10% note, payable by the franchisee in five equal annual instalments.
    Required: Prepare entries on the books of franchisor Jollibee to record the following assuming:
    a. Jollibee has substantially performed all material services, the refund period has
    expired, and the collectability of the note is reasonably assured.
    b. The refund period has expired and the collectability of the note is reasonably assured
    but Jollibee has not substantially performed all material services.
    c. Jollibee has substantially performed all services and the collectability of the note is
    reasonably assured, but the refund period has not expired.
    d. Jollibee has substantially performed all services and the refund period has expired,
    but the collectability of the note is not reasonably assured. Jollibee recognizes
    revenue by the instalment sales method.
    e. The refund period has expired, but Jollibee has not substantially performed all
    services and there is no basis for estimating the collectability of the note and the
    recognition of the note as an asset is unwarranted.
    f. Now assume that Jollibee has earned only P360, 000 from providing initial services,
    with the balance being a down payment for continuing services. If the refund period
    has expired and the collectability of the note is reasonably assured.
    ANSWER:
    a. Jollibee has substantially performed all material services, the refund period has expired,
    and the collectability of the note is reasonably assured
    Cash 240,000
    Notes Receivable 600,000
    Revenue 840,000
    b. The refund period has expired and the collectability of the note is reasonably assured
    but Jollibee has not substantially performed all material services
    Cash 240,000
    Notes Receivable 600,000
    Unearned Revenue 840,000
    Adjusting entry:
    Unearned Revenue 840,000
    Revenue 840,000
    c. Jollibee has substantially performed all services and the collectability of the note is
    reasonably assured, but the refund period has not expired
    Cash 240,000
    Notes Receivable 600,000
    Unearned Revenue 840,000
    Adjusting entry:
    Unearned Revenue 840,000
    Revenue 840,000
    d. Jollibee has substantially performed all services and the refund period has expired, but
    the collectability of the note is not reasonably assured. Jollibee recognizes revenue by the
    instalment sales method
    Cash 240,000
    Notes Receivable 600,000
    Revenue 240,000
    Unearned Revenue 600,000
    e. The refund period has expired, but Jollibee has not substantially performed all services
    and there is no basis for estimating the collectability of the note and the recognition of the
    note as an asset is unwarranted
    Cash 240,000
    Unearned Revenue 240,000
    Adjusting entry:
    Unearned Revenue 240,000
    Revenue 240,000
    f. Now assume that Jollibee has earned only P360, 000 from providing initial services, with
    the balance being a down payment for continuing services. If the refund period has expired
    and the collectibility of the note is reasonably assured
    Cash 240,000
    Notes Receivable 600,000
    Revenue 360,000
    Unearned Revenue 480,000
    Adjusting entry:
    Unearned Revenue 480,000
    Revenue 480,000

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