Brief Exercise 6-15 Pearl Windows manufactures and sells custom storm windows fo

Question

Brief Exercise 6-15 Pearl Windows manufactures and sells custom storm windows for three-season porches. Pearl 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. Pearl enters into the following non-cancellable contract on July 1, 2017, with a local homeowner. The customer purchases windows for a price of $5,760 and chooses Pearl to do the installation. Pearl 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 $1,440. The customer pays Pearl $4,800 (which equals the fair value of the windows, which have a cost of $2,160) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Pearl completes installation on October 15, 2017, and the customer pays the balance due. Prepare the journal entries for Pearl in 2017.(Assume IFRS is a constraint.) (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 intermediate calculations to 4 decimal places, e.g. 0.5675 and final answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit September 1, 2017 To record delivery of windows.,) To record cost of goods sold.) October 15, 2017

Explanation / Answer

Journal entry for Pearl in 2017 (Amount in $)

Date Account Titles and Explanations Debit Credit July 1, 2017 No Entry 0 No Entry 0 September 1, 2017 Cash Dr. 4,800 Accounts Receivable(5,760-4,800) Dr. 960 To Unearned Service Revenue 1,440 To Sales Revenue (5,760-1,440) 4,320 (To record delivery of windows) September 1, 2017 Cost of goods sold Dr. 2,160 To Inventory   2,160 (To record cost of goods sold) October 15, 2017 Cash Dr. 960 Unearned Service Revenue Dr. 1,440 To Accounts Receivable 960 To Service Revenue 1,440

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