Creative Computing sells a tablet called the Protab. The $970 sale price of a Protab package includes the following:

• A Protab computer.
• A 6-month limited warranty. This warranty guarantees that Creative will cover any costs arising due to repairs or replacements associated with defective products for up to six months.
• A coupon to purchase a Creative Probook eBook reader for $375, a price that is 40% off Probook's regular price of $625. It is expected that 20% of the discount coupons will be used.
• A coupon to purchase a one-year extended warranty for $60. Customers can purchase the extended warranty for $95 at other times if they don't use the $60 coupon. Creative estimates that 30% of customers will buy an extended warranty.
• Creative doesn't sell the Protab without the limited warranty, the option to buy a Probook, and the option to buy an extended warranty, but estimates that if it did, a Protab alone would sell for $950.

Required:
1. and 2. Indicate below if each item is a separate performance obligation and allocate the transaction price of 80,000 Protab Packs to the separate performance obligations in the contract.
3. Prepare a journal entry to record the sales of 80,000 Protab packages (ignore extended warranty sales).

Answer rating: 100% (QA)

1Yes the Protab computer is a separate performance obligation 2 Yes the 6month limited warranty and the coupon to purchase a Probook eBook reader are ... View the full answer