Problem 6-2 (Algo) Performance obligations; warranties; option [LO6-2, 6-4, 6-5] Creative Computing sells a tablet computer called the Protab. The $890 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 $145, a price that represents a 50% discount from the regular Probook price of $290. It is expected that 25% 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 35% 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 $870. 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 96,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 96,000 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 96,000 Protab Packages to the separate performance obligations in the contract. Item Description Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand alone price Item Description Protab computers 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
Problem 6-2 (Algo) Performance obligations; warranties; option [LO6-2, 6-4, 6-5] Creative Computing sells a tablet computer called the Protab. The $890 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 $145, a price that represents a 50% discount from the regular Probook price of $290. It is expected that 25% 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 35% 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 $870. 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 96,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 96,000 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 96,000 Protab Packages to the separate performance obligations in the contract. Item Description Protab computers Limited 6-month warranty Option to purchase a Probook Option to purchase extended warranty Total stand alone price Item Description Protab computers 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
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.4AP
Related questions
Question
100%
![Req 1 and 2
Prepare a journal entry to record sales of 96,000 Protab Packages (ignore any sales of extended warranties). (If no entry is required for
a transaction/event, select "No journal entry required" in the first account field.)
Req 3
View transaction list
Journal entry worksheet
1
Record the sales of 96,000 Protab Packages.
Note: Enter debits before credits.
Transaction
Record entry
General Journal
Clear entry
< Req 1 and 2
Debit
Credit
View general journal
Req 3 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1de229ca-d610-4e0a-8ba8-f4b8dab4ff7a%2Fc258e15b-8240-4e94-910f-1b2740168949%2Fcsivefv_processed.png&w=3840&q=75)
Transcribed Image Text:Req 1 and 2
Prepare a journal entry to record sales of 96,000 Protab Packages (ignore any sales of extended warranties). (If no entry is required for
a transaction/event, select "No journal entry required" in the first account field.)
Req 3
View transaction list
Journal entry worksheet
1
Record the sales of 96,000 Protab Packages.
Note: Enter debits before credits.
Transaction
Record entry
General Journal
Clear entry
< Req 1 and 2
Debit
Credit
View general journal
Req 3 >
![Problem 6-2 (Algo) Performance obligations; warranties; option [LO6-2, 6-4, 6-5]
Creative Computing sells a tablet computer called the Protab. The $890 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 $145, a price that represents a 50% discount from the regular Probook
price of $290. It is expected that 25% 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 35% 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 $870.
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 96,000 Protab
Packages to the separate performance obligations in the contract.
3. Prepare a journal entry to record sales of 96,000 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 96,000 Protab
Packages to the separate performance obligations in the contract.
Item Description
Protab computers
Limited 6-month warranty
Option to purchase a Probook
Option to purchase extended warranty
Total stand alone price
Item Description
Protab computers
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1de229ca-d610-4e0a-8ba8-f4b8dab4ff7a%2Fc258e15b-8240-4e94-910f-1b2740168949%2Fguzwwfa_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 6-2 (Algo) Performance obligations; warranties; option [LO6-2, 6-4, 6-5]
Creative Computing sells a tablet computer called the Protab. The $890 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 $145, a price that represents a 50% discount from the regular Probook
price of $290. It is expected that 25% 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 35% 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 $870.
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 96,000 Protab
Packages to the separate performance obligations in the contract.
3. Prepare a journal entry to record sales of 96,000 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 96,000 Protab
Packages to the separate performance obligations in the contract.
Item Description
Protab computers
Limited 6-month warranty
Option to purchase a Probook
Option to purchase extended warranty
Total stand alone price
Item Description
Protab computers
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
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