Sunland Windows manufactures and sells custom storm windows for porches. Sunland 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. Sunland enters into the following non-cancellable contract on July 1, 2023, with a local homeowner. The customer purchases windows for a price of $2,800 and chooses Sunland to do the installation. Sunland charges the same price for the windows regardless of whether it does the installation or not. The customer pays Sunland $2,304 (which equals the fair value of the windows, which have a cost of $1,400) on delivery and the remaining balance on installation of the windows. The windows are delivered on September 1, 2023, Sunland completes installation on October 15, 2023, and the customer pays the balance due. (a) Perform step 4 of the five-step process for revenue recognition. Prepare the journal entries for Sunland assuming Sunland estimates the stand-alone value of the installation based on an estimated cost of $480 plus a margin of 20% on cost. (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 "O" for the amounts. Round percentage allocations to 2 decimal places, e.g. 15.25% and final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Credit
Sunland Windows manufactures and sells custom storm windows for porches. Sunland 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. Sunland enters into the following non-cancellable contract on July 1, 2023, with a local homeowner. The customer purchases windows for a price of $2,800 and chooses Sunland to do the installation. Sunland charges the same price for the windows regardless of whether it does the installation or not. The customer pays Sunland $2,304 (which equals the fair value of the windows, which have a cost of $1,400) on delivery and the remaining balance on installation of the windows. The windows are delivered on September 1, 2023, Sunland completes installation on October 15, 2023, and the customer pays the balance due. (a) Perform step 4 of the five-step process for revenue recognition. Prepare the journal entries for Sunland assuming Sunland estimates the stand-alone value of the installation based on an estimated cost of $480 plus a margin of 20% on cost. (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 "O" for the amounts. Round percentage allocations to 2 decimal places, e.g. 15.25% and final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...
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Transcribed Image Text:Sunland Windows manufactures and sells custom storm windows for porches. Sunland 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.
Sunland enters into the following non-cancellable contract on July 1, 2023, with a local homeowner. The customer purchases windows
for a price of $2,800 and chooses Sunland to do the installation. Sunland charges the same price for the windows regardless of
whether it does the installation or not. The customer pays Sunland $2,304 (which equals the fair value of the windows, which have a
cost of $1,400) on delivery and the remaining balance on installation of the windows. The windows are delivered on September 1,
2023, Sunland completes installation on October 15, 2023, and the customer pays the balance due.
(a)
Perform step 4 of the five-step process for revenue recognition.
Prepare the journal entries for Sunland assuming Sunland estimates the stand-alone value of the installation based on an
estimated cost of $480 plus a margin of 20% on cost. (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 "O" for the amounts. Round percentage
allocations to 2 decimal places, e.g. 15.25% and final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented
in the problem. List all debit entries before credit entries.)
Date
Account Titles and Explanation
(To record sales)
(To record cost of goods sold)
Debit
TI
Credit
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