Exercise 18-11 Sweet Windows manufactures and sells custom storm windows for thr
ID: 2331843 • Letter: E
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Exercise 18-11 Sweet Windows manufactures and sells custom storm windows for three-season porches. Sweet also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors. Sweet enters into the following contract on July 1, 2017, with a local homeowner. The customer purchases windows for a price of $2,280 and chooses Sweet to do the installation. Sweet charges the sa ne price for the windo s respective of whether it does the installation or not. e installation service is estimated to have a standalone seling pri e of S600. The custome pays s eet1 980 which equals the star da ne se li price of the windows, which have a cost of $1,150) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Sweet completes installation on October 15, 2017, and the customer pays the balance due. Your answer is partially correct. Try again. Sweet estimates the standalone selling price of the installation based on an estimated cost of $410 plus a margin or 20% on cost. Prepare the journal entries for Sweet in 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answer to 0 decinal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit ul. 1, 2017 No Entry No Entry To record contract entered irto) Sep. 1, 2017 Cash Unearned Service Revenue Sales Revenue To recard sales) Cost of Goods Sold To record cost of goods sold) Oct. 15, 2017 Cash Unearned Service Revenue Service Revenue To record payment received)Explanation / Answer
Date Account Titles and Exlaination Debit Credit 01-Jul-17 No Entry 0 No Entry 0 01-Sep-17 Cash $ 1,980 Accounts receivable ($2,280 - $1,980) $ 300 Unearned service revenue $ 454 Sales revenue $ 1,826 Cost of goods sold $ 1,150 Inventory $ 1,150 15-Oct-17 Cash $ 300 Unearned service revenue $ 454 Service revenue $ 454 Accounts receivable $ 300 Workings: Windows = $ 1,980 Installation charges [$410 + ($410 * 20%)] = $ 492 Total = $ 2,472 Computation of allocation of sales Revenue: Sales Revenue = $1,980 + $300 = $2,280 Windows [($1,980/$2,472) X $2,280] = $ 1,826 Installation charges [($492/$2,472) X $2,280] = $ 454 Total = $ 2,280
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