Creative Computing sells a tablet computer called the Protab. The $740 sales price of a Protab Package includes the following:

• One Protab computer.
• A six-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).

 

 

Answer rating: 100% (QA)

1 The Protab computer Yes it is a separate performance obligation 2 The sixmonth limited warranty Ye... View the full answer