Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 $600, a price that represents a 25% discount from the regular Probook price of $800. It is expected that 20% of the discount coupons will be utilized.
- A coupon to purchase a one-year extended warranty for $60. Customers can buy the extended warranty for $85 at other times if they do not use the $60 coupon. 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 $760.
Required:
1. & 2. Indicate below whether each item is a separate performance obligation and allocate the transaction price of 90,000 Protab Packages to the separate performance obligations in the contract.
3. Prepare a journal entry to record sales of 90,000 Protab Packages.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started