Problem 6-2 (Algo) Performance obligations; warranties; option [LO6-2, 6-4, 6-5]

Creative Computing sells a tablet computer called the Protab. The $920 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 $400, a price that represents a 50% discount from the regular Probook price of $800. It is expected that 25% 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 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 $900.

All Protab sales are made in cash. Required: 1. & 2. Indicated 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 (ignore any sales of extended warranties).

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 90,000 Protab Packages to the separate performance obligations in the contract. Performance Obligation? Stand Alone Price Percentage of Total Stand Alone Price 0 0 Item Description Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand alone price 0 0 0 0% Item Description Percentage of Total Stand Alone Price Total Transaction Price Allocated Contract Price Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total contract price 0 Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Prepare a journal entry to record sales of 90,000 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.) View transaction list View journal entry worksheet Debit Credit No 1 Transaction 1 General Journal Cash Sales revenue Deferred revenue - coupons