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 for $65. Customers can buy the extended warranty for $65 at other times as well. Creative estimates that 30% 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 $760. Required: 1. & 2. Indicated below whether each item is a separate performance obligation and allocate the transaction price of 95,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 95,000 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 Req3 Indicated below whether each item is a separate performance obligation and allocate the transaction price of 95,000 Protab Packages to the separate performance obligations in the contract. Item Description Stand Alone Price Performance Obligation? Yes Percentage of Total Stand Alone Price 56% S 7,220,000 X No S 0 Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand alone price Yes $ 3,800,000 30% Yes x $ 1,852,500 X 14% $ 12,872,500 100% Item Description X Percentage of Total Stand Alone Price 56% Total Transaction Price Allocated Contract Price x $ 7,410,000 $ 4,156,162 30% X Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total contract price $ 7,410,000 = $ 2,187,454 14% X $ 7,410,000 $ 1,066,384 $ 7,410,000 X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Prepare a journal entry to record sales of 95,000 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 Debit Credit 1 1 Cash 7,410,000 Sales revenue Deferred revenue - discount option Deferred revenue - extended warranty 4,156,162 2,187,454 1,066,384 X
