Prepare the journal entries for coronado

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Reference no: EM132462314

Coronado Windows manufactures and sells custom storm windows for three-season porches. Coronado 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. Coronado enters into the following non-cancellable contract on July 1, 2017, with a local homeowner. The customer purchases windows for a price of $2,800 and chooses Coronado to do the installation. Coronado charges the same price for the windows regardless of whether it does the installation or not. The customer pays Coronado $2,100 (which equals the fair value of the windows, which have a cost of $1,500) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Coronado completes installation on October 15, 2017, and the customer pays the balance due.

Question 1: Prepare the journal entries for Coronado in 2017 assuming Coronado estimates the stand-alone value of the installation based on an estimated cost of $700 plus a margin of 20% on cost.

Question 2: Prepare the journal entries for Coronado in 2017 given the uncertainty of finding skilled labour, Coronado is unable to develop a reliable estimate for the fair value of the installation.

Reference no: EM132462314

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