Account Titles and Explanation No Entry No Entry Cash Accounts Receivable Unearned Service Revenue Sales Revenue (To record sales) Cost of Goods Sold Inventory (To record cost of goods sold) Cash Unearned Service Revenue Service Revenue Accounts Receivable Debit Credit 1988 662 1230 662 1230 662 Date Account Titles and Explanation Debit Cre July 1, 2025 Sep. 1, 2025 (To record sales) Oct. 15, 2025 (To record cost of goods sold)
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, 2025, with a local homeowner. The customer purchases windows for a price of $2,650 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 customer pays Wildhorse $1,988 (which equals the standalone selling price of the windows, which have a cost of $1,230) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2025, Wildhorse completes installation on October 15, 2025, and the customer pays the balance due.
(a) Wildhorse estimates the standalone selling price of the installation based on an estimated cost of $710 plus a margin of 20% on cost. Prepare the journal entries for Wildhorse in 2025
(b) Given uncertainty of finding skilled labor, Crane is unable to develop a reliable estimate for the standalone selling price of the Installation Prepare the journal entries for Crane in 2025.
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