Headland Windows manufactures and sells custom storm windows for
three-season porches. Headland 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.
Headland enters into the following contract on July 1, 2020, with a
local homeowner. The customer purchases windows for a price of
$2,420 and chooses Headland to do the installation. Headland
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 $600. The customer pays
Headland $1,960 (which equals the standalone selling price of the
windows, which have a cost of $1,120) upon delivery and the
remaining balance upon installation of the windows. The windows are
delivered on September 1, 2020, Headland completes installation on
October 15, 2020, and the customer pays the balance due.
Prepare the journal entries for Headland 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 0 for
the amounts. Round answer to 0 decimal places, e.g.
5,125.)
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Jul. 1, 2020Oct. 15, 2020Sep. 1, 2020 |
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(To record contract entered into) |
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|
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(To record sales) |
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(To record cost of goods sold) |
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|
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show work and explain
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