Exercise 18-10 Grouper Windows manufactures and sells custom storm windows for t

Question

Exercise 18-10 Grouper Windows manufactures and sells custom storm windows for three-season porches. Grouper 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. Grouper 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 Grouper to do the installation. Grouper charges the same price for the windows irrespective of whether it does the installation or not. The installation service is estimated to have a standalone selling price of $630. The customer pays Grouper $2,060 (which equals the standalone selling price of the windows, which have a cost of $1,040) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Grouper completes installation on October 15, 2017, and the customer pays the balance due. Prepare the journal entries for Grouper 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 decimal places, e-95 125 ) Date Account Titles and Explanation Debit Credit Jul. 1, 2017 (To record contract entered into) Sep. 1, 2017 (To record sales) (To record cost of goods sold) Oct. 15, 2017

Explanation / Answer

Date account titles and explanation debit credit Jul. 1, 2017 No Entry (to record contract entered into) Sep. 1, 2017 cash 2060 Accounts receivable (2280-2060) 220 Unearned service revenue (630/(2060+630)*2280) 534 Sales revenue (balancing figure) 1746 (to record sales) Cost of goods sold 1040 Inventory 1040 (to record costs of goods sold) Oct. 15, 2017 cash 220 Unearned service revenue 534 Service revenue 534 Accounts receivable 220

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