AJL Gutters manufactures and sells custom gutters for houses. AJL also provides installation service for the gutters. The installation process does not involve changes in the gutters, so this service can be provided by other vendors. The gutters also come with a 5 year assurance type warranty.

AJL enters into the following contract on June 1, 2019, with a local homeowner.

• The customer agrees to purchase gutters for a price of $6,300 and chooses AJL to do the installation.
• AJL charges the same price for the gutters irrespective of whether it does the installation or not.
• The price of the installation service is estimated to have a fair value of $1,300.

The customer pays AJL $6,300 (the gutters have a fair value of $5,800 and have a cost of $2,300) upon delivery. The gutters are delivered on August 1, 2019.

AJL completes installation on September 15, 2019.

a) What are the performance obligations in this contract?

b) What is the transaction price and how much of it is allocated to each of the performance obligations?

c) Prepare the journal entries for AJL in 2019.