Assume the same facts as in P5-2, except that customers must pay $75 to purchase the extended warranty if they don't purchase it with the $50 coupon that was included in the Protab Package. Creative estimates that 40% of customers will use the $50 coupon to purchase an extended warranty. Complete the same requirements as in P5-2.
In P5-2
Creative Computing sells a tablet computer called the Protab. The $780 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 $200, a price that represents a 50% discount from the regular probook price of $400. It is expected that 20% of the discount coupons will be utilized.
€¢ A coupon to purchase a one-year extended warranty (or $50. Customers can buy the extended warranty (or $50 at other times as well. Creative estimates that 40% 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 estimate; that if it did so, a Protab alone would sell for $760.
Required:
1. How many performance obligations are included in a Protab Package? Explain your answer.
2. List the performance obligations in the Protab Package in the following table, and complete it to allocate the transaction price of 100,000 Protab Packages to the performance obligations in the contract.

3. Prepare a journal entry to record sales of 100,000 Protab Packages (ignore any sales of extended warranties).

Transcribed Image Text:

Stand-alone Percentage of the sum of the stand-alone Allocation of total Performance obligation: selling price of the selling prices of the performance obligations transaction price to the performance obligation: (to two decimal places): performance obligation