Question 25 Date Account Titles and Explanation Debit Credit June 1 Aug. 1 (To r

Question

Question 25

Date

Account Titles and Explanation

Debit

Credit

June 1

Aug. 1

(To record sold of the windows)

Aug. 1

(To record cost of goods sold)

Sept. 15

Question 25

Windsor Windows manufactures and sells custom storm windows for enclosed porches. Windsor also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be provided by other vendors. Windsor enters into the following contract on June 1, 2014, with a local homeowner. The customer purchases windows for a price of $3,500 and chooses Windsor to do the installation. Windsor 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 $900. The customer pays Windsor $3,000 (which equals the fair value of the windows, which have a cost of $1,700) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on August 1, 2014, Windsor completes installation on September 15, 2014, and the customer pays the balance due. Prepare the journal entries for Windsor in 2014. (Round answers to 0 decimal places, e.g. 5,275. 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.)

Date

Account Titles and Explanation

Debit

Credit

June 1

Aug. 1

(To record sold of the windows)

Aug. 1

(To record cost of goods sold)

Sept. 15

Explanation / Answer

ANS;

1) On June 1, 2014, there is mere an agreement about price fising, hence no journal entry to be passed.

(2) On August 1, 2014, for delivery of goods, following entries to be passed.

a) Sale of goods-

(Being goods delivered to customer at agreed price of $ 3500)

b) Charging of cost of finished goods accont.

Cost of goods sold Account - Debit- $ 1700

To Finished Goods Account - Credit- $ 1700

(Being cost of manufactured goods)

c) Receipt of payment

Bank Account -Debit- $ 3000

To Accounts Receivable Account -Credit- $ 3000

(Being account received from customer on account of sale )

(3) On September 15, 2014 after completion of installation.

a) Receipt of balance payment from customer.

Bank Account -Debit- $ 500

Accounts Receivable - Credit- $ 500

(Being remining payment received from the customer)

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.