Exhibit 18-5 Morris Co $\begin{array} { l r r } \text { Cash } & 800 & \\\text { Notes Receivable } & 4,200 & \\\quad \text { Franchise Revenue } & & 5,000\end{array}$

question 33

Multiple Choice

Exhibit 18-5 Morris Co.sold a franchise at an initial franchise fee of $5, 000.A down payment of $800 was received with the balance covered by the issuance of a $4, 200, 6% note, payable by the franchisee in four equal annual installments.The refund period has expired and the collectibility of the note is reasonably assured.
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Refer to Exhibit 18-5.If all material services have been substantially performed, which entry to record the franchise is correct?

• A)
• \(\begin{array} { l r r }
• \text { Cash } & 800 & \\
• \text { Notes Receivable } & 4,200 & \\
• \quad \text { Franchise Revenue } & & 5,000
• \end{array}\)
• B)
• \(\begin{array} { l c c }
• \text { Cash } & 800 & \\
• \text { Notes Receivable } & 4,200 & \\
• \text { Unearned Franchise Fees } & 4,200 \\
• \text { Franchise Revenue } & 800
• \end{array}\)
• C)\(\begin{array} { l l l }
• \text { Cash } & 800 & \\
• \text { Unearned Franchise Fees } & 800
• \end{array}\)
• D)\(\begin{array} { l c c }
• \text { Cash } & 800 & \\
• \text { Notes Receivable } & 4,200 & \\
• \quad \text { Unearned Franchise Fees } & 5,000
• \end{array}\)

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