Assume That at the Time of Signing the Contract, Collection

question 115

Multiple Choice

Assume that at the time of signing the contract, collection of the receivable was assured and that service obligations were substantial. However, by October 20, 2012, substantially all continuing obligations had been met. The journal entry required at October 20, 2012 would include a:

• A)Credit to franchise fee receivable for $27,000.
• B)Debit to unearned franchise fee revenue for $36,000.
• C)Credit to franchise fee revenue for $9,000.
• D)Debit to unearned franchise fee revenue for $27,000.

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Definitions:

Salary Limits

The maximum and minimum amounts that an organization is willing to pay for a particular job position, often determined by budget restrictions and market rates.

Red-Circled Rates

Pay rates that are above the maximum of the pay scale for a position, often protected for a period even if they exceed normal salary ranges.

Merit Raises

Salary increases awarded to employees based on their performance and achievements, as opposed to cost of living adjustments or across-the-board increases.

Performance Appraisal

The process by which organizations evaluate employee job performance over a period of time.