Question

Wildhorse Windows manufactures and sells custom storm windows for three-season porches. Wildhorse 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. Wildhorse enters into the following contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $2,400 and chooses Wildhorse to do the installation. Wildhorse 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 $610. The customer pays Wildhorse $2,080 (which equals the standalone selling price of the windows, which have a cost of $1,050) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2020, Wildhorse completes installation on October 15, 2020, and the customer pays the balance due. Prepare the journal entries for Wildhorse in 2020. (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 I decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit TJul 1, 2020 No Entry OV No Entry (To record contract entered into) T Sep. 1, 2020 Cash TAccounts Receivable 320 TUnearned Service Revenue TSales Revenue (To record sales) TCost of Goods Sold 1050 Inventory (To record cost of goods sold) TOct. 15, 2020 Poct. 15, 2020 ) Cash TCash TUnearned Service Revenue Service Revenue TAccounts Receivable 1

Answer 1

Answer:

Date	Account titles and Explanation	Debit	Credit
Jul. 1,2020	No Entry for contract
Sep. 1,2020	Cash	$2,080
	Accounts receivable [2400-2080]	$320
	Unearned service revenue		$544
	Sales revenue		$1,856
	[To record sales]
	Cost of goods sold	$1,050
	Inventory		$1,050
	[To record cost of goods sold]
Oct.15, 2020	Cash	$320
	Unearned service revenue	$544
	Service revenue		$544
	Accounts receivable		$320

Calculations:

Standalone Selling price
Windows	$2,080	77.32%
Installation	$610	22.68%
Total	$2,690	100%
Actual Selling price
Windows [2400 x 77.32%]	$1,856
Installation [2400 x 22.68%]	$544
Total	$2,400