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 warrantyguarantees that Creative will cover any costs that arise due torepairs or replacements associated with defective products for upto six months. A coupon to purchase a Creative Probook e-bookreader for $125, a price that represents a 50% discount from theregular Probook price of $250. It is expected that 20% of thediscount coupons will be utilized. A coupon to purchase a one-yearextended warranty for $40. Customers can buy the extended warrantyfor $40 at other times as well. Creative estimates that 45% ofcustomers will purchase an extended warranty. Creative does notsell the Protab without the limited warranty, option to purchase aProbook, and the option to purchase an extended warranty, butestimates that if it did so, a Protab alone would sell for $600.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).
