Windsor Windows manufactures and sells custom windows for commercial office buildings. Windsor also provides installation services for the windows. The installation process can be performed by other vendors if chosen by Windsor’s customers, but Windsor will do the installation at no additional charge for its customers who buy windows from Windsor. On September 1, 2015, Windsor enters into a contract to manufacture, deliver and install windows for a particular industrial customer. The total contract price is for $30 million. The contract provides that Windsor will be paid $15 million upon delivery of the windows and $15 million when the installation is complete. Windsor will do the installation at tno additional charge, but he market value of the installation service on a contract this large is $1 million.
Windsor delivers the windows at the customer’s new office building on December 1, 2015. In accordance with the contract, Windsor is paid $15 million on the date. Installation of the windows does not begin until January 2, 2016 and installation is completed on January 31, 2016. Windsor is then paid an additional $15 million from the customer on that date.
Prepare the necessary accounting entries on December 1, 2015 and on January 31, 2016 to reflect this business transaction.