Sonny's Dry Cleaners,Inc.charges an initial franchise fee of $195,000.When the agreement is signed,a payment of $75,000 is due,followed by four annual payments of $30,000 at the end of each period.Sonny's normal borrowing rate is 12%.Prepare the entries to record the initial franchise fee on the books of Sonny's under each of the following circumstances.
(1)The franchiser has substantial services to perform and the collection of the note is extremely uncertain.
(2)The down payment is nonrefundable,collection of the note is reasonably assured,and the franchiser has performed substantially all of the services required by the initial fee.
(3)The down payment is nonrefundable,collection of the note is reasonably assured,the franchiser has performed services equivalent to the down payment,but substantial services remain to be performed.

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The Answer of Sonny's Dry Cleaners,Inc.charges an initial franchise fee of $195,000.When the agreement is signed,a payment of $75,000 is due,followed by four annual payments of $30,000 at the end of each period.Sonny's normal borrowing rate is 12%.Prepare the entries to record the initial franchise fee on the books of Sonny's under each of the following circumstances.
(1)The franchiser has substantial services to perform and the collection of the note is extremely uncertain.
(2)The down payment is nonrefundable,collection of the note is reasonably assured,and the franchiser has performed substantially all of the services required by the initial fee.
(3)The down payment is nonrefundable,collection of the note is reasonably assured,the franchiser has performed services equivalent to the down payment,but substantial services remain to be performed.