70.2K

Verified Solution

Link Copied!

Creative Computing sells a tablet computer called the Protab. The $620 sales price of a Protab Package includes the following: One Protab computer. A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. A coupon to purchase a Creative Probook e-book reader for $125, a price that represents a 50% discount from the regular Probook price of $250. It is expected that 20% of the discount coupons will be utilized. A coupon to purchase a one-year extended warranty for $40. Customers can buy the extended warranty for $40 at other times as well. Creative estimates that 45% of customers will purchase an extended warranty. Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $600. All Protab sales are made in cash. Required: 1. & 2. Indicated below whether each item is a separate performance obligation and allocate the transaction price of 120,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 120,000 Protab Packages (ignore any sales of extended warranties). Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Indicated below whether each item is a separate performance obligation and allocate the transaction price of 120,000 Protab Packages to the separate performance obligations in the contract. my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion Return to qu Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Indicated below whether each item is a separate performance obligation and allocate the transaction price of 120,000 Protab Packages to the separate performance obligations in the contract. Item Description Performance Obligation? P Stand Alone Price ne Price 72,000,000 Percentage of Total erce Stand Alone Price 96% Yes No Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand alone price Yes $ 3,000,000 4% NO 75,000,000 100% Item Description Percentage of Total Stand Alone Price 96% Total Transaction Price Allocated Contract Price 72,000,000 - $ 69,120,000 Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total contract price $ 72,000,000 2,880,000 72,000,000 Reg 1 and 2 Req3 > Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $600. All Protab sales are made in cash. Required: 1. & 2. Indicated below whether each item is a separate performance obligation and allocate the transaction price of 120,000 Protab Packages to the separate performance obligations in the contract 3. Prepare a journal entry to record sales of 120,000 Protab Packages (ignore any sales of extended warranties). Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Prepare a journal entry to record sales of 120,000 Protab Packages (ignore any sales of extended warranties). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal Credit Debit 72,000,000 Cash Sales revenue 69,120,000 2,880,000 Deferred revenue.coupons

Answer & Explanation Solved by verified expert

See Answer