Question

please complete the required 1,2, and 3

Check my work Problem 6-2 (Algo) Performance obligations; warranties; option [LO6-2, 6-4, 6-5) Creative Computing sells a tablet computer called the Protab. The $620 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 $125, a price that represents a 50% discount from the regular Probook price of $250. It is expected that 20% of the discount coupons will be utilized. • A coupon to purchase a one-year extended warranty for $40. Customers can buy the extended warranty for $40 at other times as well. 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 $600. 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 120,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 120,000 Protab Packages (ignore any sales of extended warranties). Complete this question by entering your answers in the tabs below. Reg 1 and 2 Req3 Indicated below whether each item is a separate performance obligation and allocate the transaction price of 120,000 Protab Packages to the separate performance obligations in the contract. Item Description Performance Obligation? Stand Alone Price Percentage of Total Stand Alone Price Protab computers < Prev 11 of 11 * Next >

Answer 1

А 1 Number of performance obligation is three 2 1)protab delivery to customer 3 2)purchase of ProBook 4 3)Extented warranty Stand alone price percentage of total stand alone price 7,20,00,000 96.00% Performance 8 Item Description Obligation 9 Protab tablet(600*120000) Yes 10 Limited 6-month warranty No 11 option to purchase a probook Yes option to purchase extended 12 warranty No 13 total stand alone price 30,00,000 4.00% 7,50,00,000 100% percentage of total Total Transaction Allocated stand alone price price contract price 96% 72000000 691200001 15 16 17 Item Description 18 Protab tablet 19 Limited 6-month warranty 20 option to purchase a probook option to purchase extended 21 warranty 22 Total contract price 4% 72000000 2880000 720000001 24 Requirred 3 TR Credit 720000001 General Journal Debit 1 Cash Sales revenue Deferred revenue- discount option 69120000 2880000