Brief Exercise 18A-11 Geraths Windows manufactures and sells custom storm window

Question

Brief Exercise 18A-11 Geraths Windows manufactures and sells custom storm windows for three-season porches. Geraths 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. Geraths enters into the following contract on July 1, 2014, with a local homeowner. The customer purchases windows for a price of $2,760 and chooses Geraths to do the installation. Geraths 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 $560. The customer pays Geraths $2,400 (which equals the fair value of the windows, which have a cost of $1,600) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2014, Geraths completes installation on October 15, 2014, and the customer pays the balance due. Prepare the journal entries for Geraths in 2014. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Explanation / Answer

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Jes

Date Details Dr. ($) Cr.($) Jul 1 2014 Account Receivable 2,760.00 Revenue 2,760.00 (For Revenue a window) Sep 1 2014 Bank A/c Dr. 2,400.00 Account Receivable 2,400.00 (For collection at delivery of window) Sep 1 2014 Cost of goods sold 1,600.00 Revenue A/c 1,600.00 (For bookking of cost of goods sold) Oct 15 2014      360.00 Installation Exp.      360.00 Revenue A/c (For recording of installation exp.) Oct 15 2014      360.00 Bank A/c Dr.      360.00 Account Receivable (For collection at installation of window)

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