Creative Computing sells a tablet computer called the Protab.The $605 sales price of a Protab Package includes thefollowing:
- One Protab computer.
- A 6-month limited warranty. This warranty guarantees thatCreative will cover any costs that arise due to repairs orreplacements associated with defective products for up to sixmonths.
- A coupon to purchase a Creative Probook e-book reader for $325,a price that represents a 50% discount from the regular Probookprice of $650. It is expected that 20% of the discount coupons willbe utilized.
- A coupon to purchase a one-year extended warranty for $55.Customers can buy the extended warranty for $55 at other times aswell. Creative estimates that 30% of customers will purchase anextended warranty.
- Creative does not sell the Protab without the limited warranty,option to purchase a Probook, and the option to purchase anextended warranty, but estimates that if it did so, a Protab alonewould sell for $585.
All Protab sales are made in cash.
Required:
1. & 2. Indicated below whether each item is aseparate performance obligation and allocate the transaction priceof 120,000 Protab Packages to the separate performance obligationsin the contract.
3. Prepare a journal entry to record sales of120,000 Protab Packages (ignore any sales of extendedwarranties).
