Question

Sarasota Windows manufactures and sells custom storm windows for three-season porches. Sarasota 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. Sarasota 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 Sarasota to do the installation. Sarasota 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 Sarasota $1,980 (which equals the standalone selling price of the windows, which have a cost of $1,140) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Sarasota completes installation on October 15, 2017, and the customer pays the balance due. Prepare the journal entries for Sarasota 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 o for the amounts. Round answer to O decimal places, e.g. 5,125.)

Answer 1

Sarasota Windows Manufacturers
Date	Account Title and Explanation	Debit	Credit
July1,2017	No entry, because neither party has performed under the contract.
	On September 1,2017 Sarasota has two service obligation:
	Windows	$ 1,980.00
	Installation	$     630.00
	Total	$ 2,610.00
	Allocation:
	Windows=(1980/2610)*2280	$       1,730
	Installation=(630/2610)*2280	$           550
	Total	$       2,280
Sep1,2017	Cash	$ 1,980.00
	Accounts Receivable($2280-$1980)	$     300.00
	To Unearned Service Revenue		$               550
	To Service Revenue		$            1,730
	(Service Revenue is recognized)
	Cost of goods sold	$ 1,140.00
	To Inventory		$      1,140.00
	(Cost of goods sold)
Oct 15,2017	Cash	$     300.00
	Unearned Service Revenue	$           550
	To Service Revenue(Installation)		$               550
	To Accounts Receivable		$               300
	(Sale of window is recognized once delivered and Installation recognized when installed)