Novak Windows manufactures and sells custom storm windows for enclosed porches. Novak also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be provided by other vendors. Novak enters into the following contract on June 1, 2021, with a local homeowner. The customer purchases windows for a price of $4,770 and chooses Novak to do the installation. Novak 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 $1,830. The customer pays Novak $4,270 (which equals the fair value of the windows, which have a cost of $2,300) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on August 1, 2021, Novak completes installation on September 15, 2021, and the customer pays the balance due. (Round amounts to nearest dollar.) Prepare the journal entries for Novak in 2021 Date Account Titles and Explanation Debit Credit June 1, 2021 August 1, 2021 September 15, 2021 June 1, 2021 August 1, 2021 September 15, 2021 (To record windows delivered) June 1, 2021 August 1, 2021 September 15, 2021 (To record cost of goods sold) June 1, 2021 August 1, 2021 September 15, 2021
Novak Windows manufactures and sells custom storm windows for enclosed porches. Novak also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be provided by other vendors. Novak enters into the following contract on June 1, 2021, with a local homeowner. The customer purchases windows for a price of $4,770 and chooses Novak to do the installation. Novak 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 $1,830. The customer pays Novak $4,270 (which equals the fair value of the windows, which have a cost of $2,300) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on August 1, 2021, Novak completes installation on September 15, 2021, and the customer pays the balance due. (Round amounts to nearest dollar.)
Prepare the
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Date |
Account Titles and Explanation |
Debit |
Credit |
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June 1, 2021 August 1, 2021 September 15, 2021 |
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(To record windows delivered) |
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June 1, 2021 August 1, 2021 September 15, 2021 |
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(To record cost of goods sold) |
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