Windsor manufactures and sells furnaces, and will provide installation and servi

Question

Windsor manufactures and sells furnaces, and will provide installation and service if requested. On Feburary 14, Windsor enters into a contract with the owner of a small office building to have a furnace installed for $3,500. The price includes the furnace, the installation and 3 years of free maintenance. The price of the installation service is estimated to have a fair value of $900. The fair value of the furnace is $3,000. The fair value of the service contract is $490. The furnace was installed on February 15. Prepare Windsor's journal entry to record this transation.

Explanation / Answer

1) Construction Expenses(3000+490+900) $4390
Construction in Process (Loss) $890
  Revenue from Long-term Contracts   $3500

Loss from Long-term Contracts $890
      Construction in Process (Loss)   $890

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