PROBLEM 1

1. September 01, 2021

2. Total Revenue from Franchise

Installment payment ₱ 320,000.00

x PVF 3.7908
Present value of the note ₱ 1,213,056.00

Downpayment ₱ 800,000.00
Present value of the note 1,213,056.00
Franchise Fee Revenue 2,013,056.00
Continuing Franchise Fee
(1,900,000 x 5%) 95,000.00
TOTAL REVENUE ₱ 2,108,056.00

3. Total net income

Initial Franchise Fee ₱ 2,013,056.00

Cost of Franchise (740,000.00)
GROSS PROFIT 1,273,056.00
Continuing Franchise Fee 95,000.00
Indirect costs
(340,000 - 144,000) (484,000.00)
Interest income 78,793.41
TOTAL NET INCOME ₱ 962,849.41
Computations
Date Present value Payment Interest Income Amortized Cost
Apr. 30, 2021 ₱ 1,213,056.00
Dec. 1, 2021 1,213,056.00 ₱ 320,000.00 ₱ 70,761.60 ₱ 249,238.40
Dec. 31, 2022 963,817.60 30,000.00 8,031.81 21,968.19

4. Gross Profit Rate

Gross Profit ₱ 1,273,056.00
÷ Revenue (IFF) 2,013,056.00
GROSS PROFIT RATE 63.24%

5. Journal entry on September 1, 2021

Unearned Franchise Fee Revenue 2,013,056.00

Franchise Fee Revenue 2,013,056.00

Cost of Franchise Cost 740,000.00

Prepaid Franchise Cost 740,000.00

Franchise Expense 484,000.00

Cash 484,000.00

6. Journal entry on December 1, 2021

Cash 320,000.00
Unearned Interest Income 70,761.60
Notes Receivable 320,000.00
Interest Income 70,761.60
PROBLEM 2
1. Total revenue

Downpayment ₱ 200,000.00
PV of Note 656,000.00
Less:
Advertising expense 135,000.00
Supplies and equipment 6,250.00
TOTAL REVENUE ₱ 714,750.00

Computations:
Annual payment ₱ 160,000.00
x PVF @ 7% 4.10
Present value of the note ₱ 656,000.00

2. Journal entry

Cash 200,000.00
Note Receivable 800,000.00
Franchise Fee Revenue 714,750.00
Unearned Franchise Fee Revenue 141,250.00
Unearned Interest Income 144,000.00

Computations:
Advertising expense ₱ 135,000.00
Supplies and Equipment 6,250.00
Unearned Interest Income ₱ 141,250.00
PROBLEM 3
1. Total revenue

Semi-annual payments ₱ 30,000.00

x PVF 7.72
Present value of the note ₱ 231,600.00

Franchise Fee Revenue

Cash ₱ 200,000.00
Present value of the note 231,600 ₱ 431,600.00

Contingent Franchise Fee Revenue

1,000,000 x 5% 5,000.00
TOTAL REVENUE ₱ 436,600.00

2. Total net income

Date Present value Payment Interest Income Amortized Cost

Jan. 1, 2022 ₱ 231,600.00
Jun. 30, 2022 231,600.00 ₱ 30,000.00 ₱ 11,580.00 ₱ 18,420.00
Dec. 31, 2022 213,180.00 30,000.00 10,659.00 19,341.00

Total revenue ₱ 436,600.00

Interest Income
₱ 11,580.00
10,659.00 22,239.00
NET INCOME ₱ 458,839.00
 DatePresent value
Payment
Interest Income
Amortized Cost
Jan. 1, 2 #REF!
Jun. 30, #REF! ### #REF! #REF!
Dec. 31, #REF! ### #REF! #REF!