Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Brinks Modern Internal Auditing A Common Body Of Knowledge

Authors: Robert R. Moeller

7th Edition

0470293039, 978-0470293034

More Books

Students also viewed these Accounting questions

Question

Identify the five core elements of the job characteristics model.

Answered: 1 week ago

Question

10. What is meant by a feed rate?

Answered: 1 week ago

Question

6. Does your speech have a clear and logical structure?

Answered: 1 week ago