Q#8

Creative Computing sells a tablet computer called the Protab. The $970 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 $375, a price that represents a 40% discount from the regular Probook price of $625. It is expected that 20% of the discount coupons will be utilized.
• A coupon to purchase a one-year extended warranty for $50. Customers can buy the extended warranty for $85 at other times if they do not use the $50 coupon. 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 $950.

Required: 1. & 2. Indicate below whether each item is a separate performance obligation and allocate the transaction price of 80,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 80,000 Protab Packages.

Item Descrption	Performance Obligation?		Stand Alone Price		Percentage of Total Stand Alone Price
Protab tablet					0
Limited 6-month warranty					0
Option to purchase a Probook					0
Option to purchase extended warranty					0
Total stand alone price			$0		0.00%
Item Descrption	Percentage of Total Stand Alone Price		Total Transaction Price	=	Allocated Contract Price
Protab tablet
Limited 6-month warranty
Option to purchase a Probook
Option to purchase extended warranty
Total contract price					$0

Required 3

Transaction	General Journal	Debit	Credit
1