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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 $450, a price that represents a 40% discount from the regular Probod price of $750. 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 $90 at other times if they do not use the $65 coupon. 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.

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 $450, a price that represents a 40% discount from the regular Probod price of $750. 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 $90 at other times if they do not use the $65 coupon. 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $450, a price that represents a 40% discount from the regular Probook price of $750. 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 $90 at other times if they do not use the $65 coupon. 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. Required: 1. & 2. Indicate 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. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Indicate 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 Protab tablet Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand-alone price Item Description Protab tablet Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total contract price Performance Obligation? Percentage of Total Stand- Alone Price < Req 1 and 2 Stand-Alone Price Total Transaction Price Req 3 > Percentage of Total Stand-Alone Price Allocated Contract Price
Transcribed Image Text: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 $450, a price that represents a 40% discount from the regular Probook price of $750. 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 $90 at other times if they do not use the $65 coupon. 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. Required: 1. & 2. Indicate 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. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Indicate 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 Protab tablet Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand-alone price Item Description Protab tablet Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total contract price Performance Obligation? Percentage of Total Stand- Alone Price < Req 1 and 2 Stand-Alone Price Total Transaction Price Req 3 > Percentage of Total Stand-Alone Price Allocated Contract Price
Req 1 and 2 Req 3 Prepare a journal entry to record sales of 100,000 Protab Packages. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet Record the sales of 100,000 Protab Packages. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general journal
Transcribed Image Text:Req 1 and 2 Req 3 Prepare a journal entry to record sales of 100,000 Protab Packages. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet Record the sales of 100,000 Protab Packages. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general journal
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