Geraths Windows manufactures and sells custom storm windows for three-season por

Question

Geraths Windows manufactures and sells custom storm windows for three-season porches. Geraths 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. Geraths enters into the following contract on July 1, 2014, with a local homeowner. The customer purchases windows for a price of $2,140 and chooses Geraths to do the installation. Geraths charges the same price for the windows irrespective of whether it does the installation or not. The price of the installation service is estimated to have a fair value of $640. The customer pays Geraths $1,700 (which equals the fair value of the windows, which have a cost of $1,300) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2014, Geraths completes installation on October 15, 2014, and the customer pays the balance due. Prepare the journal entries for Geraths in 2014.

Explanation / Answer

Cash 1700           To Enearned revenue 1700 ( upon delivery of windows) Accunts Receivable 2140            To Sales 2140 ( Upon Installation of Windows ) Cash 440 Enearned Revenue 1700              To Account Receivable 2140 ( Upon Installation of Windows and Payment Received )

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.