Question

Creative Computing sells a tablet computer called the Protab. The $740 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 20% of the discount coupons will be utilized. • A coupon to purchase a one-year extended warranty for $65. Customers can buy the extended warranty for $65 at other times as well. Creative estimates that 40% 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 $720. 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 100,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 100,000 Protab Packages (ignore any sales of extended warranties). Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 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. Item Description Performance Stand Alone Price Percentage of Total Obligation? Stand Alone Price Protab computers 0 Limited 6-month warranty 0 Option to purchase a Probook 0 Option to purchase extended warranty 0 Total stand alone price S 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 S 0 < Req 1 and 2 Req3 >

Answer 1

1 소 Answer:- Summatized the information and data provided in the question: "Coeative Computing sells: a tablet computer called the protab? @ Package of $740 sales price includes; ->Pootab Computer - 1 → Limited, wastanity for 6 months. → Coupon to perschase e-book foo$400 (tepoesents 50'ſ . discocent) expected 2016. etilized → Coupon to puschase t year warranty for $65 regular poice $65 expected 40% Poichase → Preotab Computer pource alone is $720.

2. Performance stard deng y of sum of Wbcation of obligation feeling the the stand along Motal transactions perfomance selling price of porce-to each obligation the performance Performance obligations obligation Peotab tablet 172,009.000od 90.00%. 8-66,600,000.00 Foption to $8,000,000.00 10:00'). $ 7,400,000.00 ruschase probeer leption to extended $ 0.00% / warranty Total 180,000 POO 100.00% 474,000,000 → Protab selling price a 100000 units $780 $72,000,000 7 Selling poice of option to puéchase poobook = 100000 units X 201. utilisation * $400 $8,000,000 y selling price of option to puschase extended warranty=($65-$65)*10000units 140.1 = $0 Total $80,000,000 → 6 of protab selling porce of total selling potce 40,000,000/-+-80,009000-9091. ~ % of, option to purchase probook of total selling poice =$8,000,000/ $80,000,000 = 10.8. -

3 woltants -el of option to purchase extended of total selling price zo. - Total transaction poice - 100000 units * $740 $74,000,000 Allocation of total transaction price to protab $34,000,000 X 90%. $66,600,000 Allocation of total transaction porce to option to purchase probook $74,000,000 X 10% = $7,400,000 JOURNAL ENTRY: Debit Credit Account title. cash $74,000,000 $66,609000 sales revenue 17400,000 Deferred Revenue discount option Please please kindly Up - vote. It helps me; thank you