The installation process does not involve changes in the windows, so this service can be provided by other vendors. Pharoah enters into the following contract on June 1, 2021, with a local homeowner. The customer purchases windows for a price of $4,740 and chooses Pharoah to do the installation. Pharoah charges the same price for the windows irrespective of whether it does the installation or not. The price of the installation service is estimated to have a fair value of $1,860. The customer pays Pharoah $4,340 (which equals the fair value of the windows, which have a cost of $2,500) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on August 1, 2021, Pharoah completes installation on September 15, 2021, and the customer pays the balance due. (Round amounts to nearest dollar.) Prepare the journal entries for Pharoah in 2021.
Pharoah Windows manufactures and sells custom storm windows for enclosed porches. Pharoah also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be provided by other vendors. Pharoah enters into the following contract on June 1, 2021, with a local homeowner. The customer purchases windows for a price of $4,740 and chooses Pharoah to do the installation. Pharoah charges the same price for the windows irrespective of whether it does the installation or not. The price of the installation service is estimated to have a fair value of $1,860. The customer pays Pharoah $4,340 (which equals the fair value of the windows, which have a cost of $2,500) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on August 1, 2021, Pharoah completes installation on September 15, 2021, and the customer pays the balance due. (Round amounts to nearest dollar.)
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