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:Pearl Windovis manufactures and selis custom storm windows for thres-season porches. Pearl also providas installation servics for
the windows. The installation process doss not involve changes in tha windows, so this service can be parformad by other vandors.
Pearl enters into the following contract on July 1. 2020, with a local homeowner. Ths customer purchases windovs for a price of
$2.360 and chooses Pearl to do the installation. Peari charges the sams price for the windovs irrespective of whather it dos tha
installation or not. Theinstalation servica is estimated to havea standalone salling price of $570. The customer pays Pearl $2,100
which squals the standalone seling price of the windows, which havs a cost of $1,110) upon dalivary and the remaining balance
upon installation ofthe windows. The windovs are delivered on Seotamber 1, 2020, Pearl complatss installation on October 15,
2020, and the customer pays the balance dua.
Prepare the journal antries for Pearl in 2020.(Credit account tities are automaticaily indented when the amount is entered. Do not indent
manuaily. If no entry is required, select "No entry" for the account tities and enter O for the amounts. Round answer to O diecimai places, eg.
5,125.)
Date
Account Titles and Explanation
Debit
Credit
(To record contract entered into)
(To record sales)
(To record cost of goods sold)
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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