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On October 1 , 2016, the Submarine Sandwich Company entered into a franchise agreement with an individual. In exchange for an initial franchise fee of $300,000, Submarine will provide initial services to the franchisee to include assistance in design and construction of the building, help in training employees, and help in obtaining financing. Ten percent of the initial franchise fee is payable on October 1, 2016, with the remaining$270,000 payable in nine equal annual installments beginning on October 1, 2017. These installments will include interest at an appropriate rate. The franchise opened for business on January 15, 2017. Required: Assume that the initial services to be performed by Submarine Sandwich subsequent to October 1, 2016, are substantial and that collectibility of the installment receivable is reasonably certain. Substantial performance of the initial services is deemed to have occurred when the franchise opened. Prepare the necessary journal entries for the following dates (ignoring interest charges): 1. October 1, 2016. 2. January 15, 2017

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In this exercise, we will prepare the journal entries for franchise sales.

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accounting

Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,028.05 and No. 5893 for$494.25. The following information is available for its September 30, 2017, reconciliation.

From the September 30 Bank StatementPREVIOUS BALANCETOTAL CHECKS AND DEBITSTOTAL DEPOSITS AND CREDITSCURRENT BALANCE16,800.459,620.0511,272.8518,453.25\begin{matrix} \text{From the September 30 Bank Statement}\\ \text{PREVIOUS BALANCE} & \text{TOTAL CHECKS AND DEBITS} & \text{TOTAL DEPOSITS AND CREDITS} & \text{CURRENT BALANCE}\\ \text{16,800.45} & \text{9,620.05} & \text{11,272.85} & \text{18,453.25}\\ \end{matrix}

CHECKS AND DEBITS DEPOSITS AND CREDITSDateNoAmountDateAmount09/0358881,028.0509/051,103.7509/045902719.9009/122,226.9009/0759011,824.2509/214,093.0009/17600.25 NSF09/252,351.7009/205905937.0009/3012.50 IN09/225903399.1009/301,485.00 CM09/2259042,090.0009/285907213.8509/2959091,807.65\begin{matrix} \text{CHECKS AND DEBITS} & \quad & \quad & \text{ DEPOSITS AND CREDITS}\\ \text{Date} & \text{No} & \text{Amount} & \text{Date} & \text{Amount}\\ \text{09/03} & \text{5888} & \text{1,028.05} & \text{09/05} & \text{1,103.75}\\ \text{09/04} & \text{5902} & \text{719.90} & \text{09/12} & \text{2,226.90}\\ \text{09/07} & \text{5901} & \text{1,824.25} & \text{09/21} & \text{4,093.00}\\ \text{09/17} & \quad & \text{600.25 NSF} & \text{09/25} & \text{2,351.70}\\ \text{09/20} & \text{5905} & \text{937.00} & \text{09/30} & \text{12.50 IN}\\ \text{09/22} & \text{5903} & \text{399.10} & \text{09/30} & \text{1,485.00 CM}\\ \text{09/22} & \text{5904} & \text{2,090.00}\\ \text{09/28} & \text{5907} & \text{213.85}\\ \text{09/29} & \text{5909} & \text{1,807.65}\\ \end{matrix}

From Chavez Company’s Accounting RecordsCash Receipts DepositedDateCash Date DebitSep.1,103.7552,226.90124,093.00212,351.70251,682.753011,458.10\begin{matrix} \text{From Chavez Company’s Accounting Records}\\ \text{Cash Receipts Deposited}\\ \text{Date} & \quad & \text{Cash Date Debit}\\ \text{Sep.} & \quad & \text{1,103.75}\\ \text{5} & \quad & \text{2,226.90}\\ \text{12} & \quad & \text{4,093.00}\\ \text{21} & \quad & \text{2,351.70}\\ \text{25} & \quad & \text{1,682.75}\\ \text{30} & \quad & \text{11,458.10}\\ \end{matrix}

From Chavez Company’s Accounting RecordsCash DisbursementsCheck no.Cash Credit59011,824.255902719.905903399.1059042,060.005905937.005906982.305907213.855908388.0059091,807.659,332.05\begin{matrix} \text{From Chavez Company’s Accounting Records}\\ \text{Cash Disbursements}\\ \text{Check no.} & \quad & \text{Cash Credit}\\ \text{5901} & \quad & \text{1,824.25}\\ \text{5902} & \quad & \text{719.90}\\ \text{5903} & \quad & \text{399.10}\\ \text{5904} & \quad & \text{2,060.00}\\ \text{5905} & \quad & \text{937.00}\\ \text{5906} & \quad & \text{982.30}\\ \text{5907} & \quad & \text{213.85}\\ \text{5908} & \quad & \text{388.00}\\ \text{5909} & \quad & \text{1,807.65}\\ \quad & \quad & \text{9,332.05}\\ \end{matrix}

CashAcct. No. 101DateExplanationPRDebitCreditBalanceAug. 31Balance15,278.15Sep. 30Total receiptsR1211,458.1026,736.2530Total disbursementsD239,332.0517,404.20\begin{matrix} \quad & \text{Cash} & \quad & \quad & \quad & \text{Acct. No. 101}\\ \text{Date} & \text{Explanation} & \text{PR} & \text{Debit} & \text{Credit} & \text{Balance}\\ \text{Aug. 31} & \text{Balance} & \quad & \quad & \quad & \text{15,278.15}\\ \text{Sep. 30} & \text{Total receipts} & \text{R12} & \text{11,458.10} & \quad & \text{26,736.25}\\ \text{30} & \text{Total disbursements} & \text{D23} & \quad & \text{9,332.05} & \text{17,404.20}\\ \end{matrix}

Check No. 5904 is correctly drawn for $2,090 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of$2,060. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum (CM) is from the collection of a $1,500 note for Chavez Company by the bank. The bank deducted a$15 collection expense. The collection and fee are not yet recorded. 1. Prepare the September 30, 2017, bank reconciliation for this company. 2. Prepare the journal entries (in dollars and cents) to adjust the book balance of cash to the reconciled balance. 3. The bank statement reveals that some of the prenumbered checks in the sequence are missing. Describe three situations that could explain this.

accounting

The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017. a. On July 31, the company’s Cash account has a $27,497 debit balance, but its July bank statement shows a$27,233 cash balance. b. Check No. 3031 for $1,482 and Check No. 3040 for$558 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $382 and Check No. 3069 for$2,281, both written in July, are not among the canceled checks on the July 31 statement. c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,270 but was erroneously entered in the accounting records as$1,250. d. The July bank statement shows the bank collected $8,000 cash on a noninterest-bearing note for Branch, deducted a$45 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement. e. The bank statement shows an $805 charge for a$795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF. f. The July statement shows a$25 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received. g. Branch’s July 31 daily cash receipts of $11,514 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement. 1. Prepare the bank reconciliation for this company as of July 31, 2017. 2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. 3. Assume that the July 31, 2017, bank reconciliation for this company is prepared and some items are treated incorrectly. For each of the following errors, explain the effect of the error on (i) the adjusted bank statement cash balance and (ii) the adjusted Cash account book balance. a. The company’s unadjusted Cash account balance of$27,497 is listed on the reconciliation as $27,947. b. The bank’s collection of the$8,000 note less the $45 collection fee is added to the bank statement cash balance on the reconciliation.