Question
Sweet Acacia Windows manufactures and sells custom storm windows for three-season porches. Sweet Acacia also provides installation service for the windows. The installation process does
Sweet Acacia Windows manufactures and sells custom storm windows for three-season porches. Sweet Acacia 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 Acacia enters into the following non-cancellable contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $3,200 and chooses Sweet Acacia to do the installation. Sweet Acacia charges the same price for the windows regardless of whether it does the installation or not. The price of the installation service is estimated to have a fair value of $875. The customer pays Sweet Acacia $2,625 (which equals the fair value of the windows, which have a cost of $1,900) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2020, Sweet Acacia completes installation on October 15, 2020, and the customer pays the balance due. Prepare the journal entries for Sweet Acacia on July 1, September 1, and October 15, 2020. (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 percentage allocations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)
No Entry No Entry 0 Cash 2625 Unearned Revenue 1009.01 Sales Revenue 1615.9 (To record sales) Cost of Goods Sold 1900 Inventory 1900 (To record cost of goods sold) Cash 875 Unearned Revenue 1009.01 Service Revenue 1009.01
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