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I cant figure out the option purchase extended warranty calculation A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise
I cant figure out the option purchase extended warranty calculation
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 $180, a price that represents a 30% discount from the regular Probook price of $600. It is expected that 20% of the discount coupons will be utilized. A coupon to purchase a one-year extended warranty for $45. Customers can buy the extended warranty for $45 at other times as well. Creative estimates that 35% 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. Customers must pay $70 to purchase the extended warranty if they don't purchase it with the $45 coupon that was included in the Protab Package. Creative estimates that 35% of customers will use the $45 coupon to purchase an extended warranty. Required: Indicated below whether each item is a separate performance obligation and allocate the transaction price of 100,000 Protab Packages to the separate performance obligations in the contract. Prepare a journal entry to record sales of 100,000 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.)Step by Step Solution
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