Business
Cost Accounting
Geraths Windows manufactures and sells custom storm windows for three-season

Geraths Windows manufactures and sells custom storm windows for three-season

Geraths Windows manufactures and sells custom storm windows for three-season porches. Geraths 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. Geraths enters into the following non-cancellable contract on July 1, 2017, with a local homeowner. The customer purchases windows for a price of $2,400 and chooses Geraths to do the installation. Geraths 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 $600. The customer pays Geraths $2,000 (which equals the fair value of the windows, which have a cost of $1,100) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Gerath completes installation on October 15, 2017, and the customer pays the balance due. Prepare the journal entries for Geraths in 2017. (Assume IFRS is a constraint and round amounts to nearest dollar.)

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