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Gershwin Corporation obtained a franchise from Sonic Hedgehog Inc. for a cash payment of $180,000 on April 1, 2014. The franchise grants Gershwin the right to sell certain products and services for a period of 10 years Prepare Gershwin'sApril 1 journal entry and December 31 adjusting entry

User Contrebis
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Answer:

Step-by-step explanation:

The journal entry is shown below:

On April 1

Franchise A/c Dr $180,000

To Cash A/c $18,0000

(Being the purchase of a franchise is recorded)

On December 31

Franchise Amortization Fee A/c Dr $13,500

To Franchise A/c $13,500

(Being the franchise amortization fee is recorded)

The computation is shown below:

= $180,000 ÷ 10 years × 9 months ÷ 12 months

= $13,500

User Benjamin Urquhart
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