In: Accounting
Buffalo Windows manufactures and sells custom storm windows for
three-season porches. Buffalo 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.
Buffalo enters into the following non-cancellable contract on July
1, 2020, with a local homeowner. The customer purchases windows for
a price of $3,300 and chooses Buffalo to do the installation.
Buffalo charges the same price for the windows regardless of
whether it does the installation or not. The price of the
installation service is estimated to have a fair value of $720. The
customer pays Buffalo$2,880 (which equals the fair value of the
windows, which have a cost of $2,000) upon delivery and the
remaining balance upon installation of the windows. The windows are
delivered on September 1, 2020, Buffalo completes installation on
October 15, 2020, and the customer pays the balance due.
Prepare the journal entries for Buffalo on July 1, September 1, and
October 15, 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 percentage
allocations to 2 decimal places, e.g. 15.25 and final answers to 0
decimal places, e.g. 5,275. Record journal entries in the order
presented in the problem.)