Business, 19.05.2020 20:05 mnknmklhnklnj2583

Buffalo Windows manufactures and sells custom storm windows for three-season porches. Buffalo 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. Buffalo enters into the following contract on July 1, 2020, with a local homeowner. The customer purchases windows for a price of $2,340 and chooses Buffalo to do the installation. Buffalo charges the same price for the windows irrespective of whether it does the installation or not. The customer pays Buffalo $1,960 (which equals the standalone selling price 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, 2020, Buffalo completes installation on October 15, 2020, and the customer pays the balance due.

Required:

a. Buffalo estimates the standalone selling price of the installation based on an estimated cost of $ 450 plus a margin of 30% on cost. Prepare the journal entries for Buffalo in 2017.
b. Given uncertainty of finding skilled labor, Buffalo is unable to develop a reliable estimate for the standalone selling price of the installation. Prepare the journal entries for Buffalo in 2017.

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