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 $1,930 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 $630. The customer pays Geraths $1,500 (which equals the fair value of the windows, which have a cost of $1,000) 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.
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 $1,930 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 $630. The customer pays Geraths $1,500 (which equals the fair value of the windows, which have a cost of $1,000) 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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
$1,930 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 $630. The customer pays Geraths $1,500 (which equals the fair value of the
windows, which have a cost of $1,000) 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54128468-4f2d-4260-8997-bb4d6478a7d5%2F28ed28f6-1e80-439b-a80c-79706748f8bc%2Fw29b61j_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
$1,930 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 $630. The customer pays Geraths $1,500 (which equals the fair value of the
windows, which have a cost of $1,000) 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.
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