Question: Creative Computing sells a tablet computer called the Protab. The $875 sales price of a Protab Package includes the following: One Protab computer. A 6-month

Creative Computing sells a tablet computer called the Protab. The $875 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 $225, a price that represents a 50% discount from the regular Probook price of $450. It is expected that 20% of the discount coupons will be utilized.

A coupon to purchase a one-year extended warranty for $60. Customers can buy the extended warranty for $60 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 $855.

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).

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 Obligation?	Stand Alone Price		Percentage of Total Stand Alone Price
Protab computers
Limited 6-month warranty
Option to purchase a Probook
Option to purchase extended warranty
Total stand alone price

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

3. Record the sales of 100,000 Protab Packages.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1

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