Question
Melisa Corporation manufactures and sells custom storm windows for enclosed porches. Melisa also provides installation service for the windows. The installation process does not involve
Melisa Corporation manufactures and sells custom storm windows for enclosed porches. Melisa also provides installation service for the windows. The installation process does not involve changes in the windows, so other vendors can provide this service. Melisa enters into the following contract on June 1, 2021, with a local homeowner. The customer purchases windows for a price of $4,800 and chooses Melisa to do the installation. Melisa 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 $1,000. The customer pays Melisa $4,000 (which equals the fair value of the windows, which have a cost of $2,300) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on August 1, 2021, Melisa completes installation on September 15, 2021, and the customer pays the balance due.
INSTRUCTION - Prepare Journal entries for Melisa Corporation
- On June 1, 2021
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- On August 1, 2020. Do not forget that Melisa has two performance obligations:
(1) the delivery of the windows and
(2) the installation of the windows.
Journal entries to record for delivery of windows and installation.
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Journal entries to record cost of sales
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- On September 15, 2020
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