Pearl Windows manufactures and sells custom storm windows for three-season porches. Pearl 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. Pearl enters into the following contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $2,360 and chooses Pearl to do the installation. Pearl 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 $570. The customer pays Pearl $2,100 (which equals the standalone selling price of the windows, which have a cost of $1,110) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2020, Pearl completes installation on October 15, 2020, and the customer pays the balance due.
Prepare the journal entries for Pearl in 2020
Transcribed Image Text:**Journal Entry Exercise for Pearl Windows**
**Background Information:**
Pearl Windows manufactures and sells custom storm windows for three-season porches. Pearl also provides installation services for these windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors.
Pearl enters into the following contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $23,620 and chooses Pearl to do the installation. Pearl charges the same prices for the windows irrespective of whether it does the installation or not. The installation service is contracted with a total standalone selling price of $570. The customer pays Pearl $2,100 (which equals the standalone selling price of the windows, which have a cost of $11,110) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2020. Pearl completes installation on October 15, 2020, and the customer pays the balance due.
**Journal Entries for Pearl in 2020:**
(Note: 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 0 for the amounts. Round answer to 0 decimal places, e.g., 5,125.)
| Date | Account Titles and Explanation | Debit | Credit |
|------------|----------------------------------------------------------------------|------------|------------|
| | (To record contract entered into) | | |
| | | | |
| | | | |
| | (To record sales of windows) | | |
| | | | |
| | | | |
| | (To record cash collected) | | |
| | | | |
| | | | |
| | (To record cost of goods sold) | | |
| | | | |
| | | | |
| | | | |
| | | | |
This table guides the preparation of journal entries for recording sales transactions, cash collected, and the cost of goods sold for Pearl in 2020. Each entry should include the date, account titles and explanation, debit, and credit
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
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