Creative Computing sells a tablet computer called the Protab. The $970 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 $250, a price that represents a 50% discount from the regular Probook price of $500. 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 30% 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 $950. All Protab sales are made in cash.

Creative Computing sells a tablet computer called the Protab. The $970 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 $250, a price that represents a 50% discount from the regular Probook price of $500. 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 30% 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 $950. All Protab sales are made in cash.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10RE

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Creative Computing sells a tablet computer called the Protab. The $780 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 $200, a price that represents a 50% discount from the regular Probook price of $400. It is expected that 20% of the discount coupons will be utilized. • A coupon to purchase a one-year extended warranty for $50. Customers can buy the extended warranty for $50 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 $760. Required: 1. How many…
Creative Computing sells a tablet computer called the Protab. The $780 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 $200, a price that represents a 50% discount from the regular Probook price of $400. It is expected that 20% of the discount coupons will be utilized. . A coupon to purchase a one-year extended warranty for $50. Customers can buy the extended warranty for $50 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 $60. Required: 1. How many…
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Dolores’ Music Emplorium carries a wide variety of music promotion techniques- warranties and premiums- to attract customers.Musical instruments and sound equipment are sold in a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experiences, is 2% on sales.The premium is offered on the recorded and sheet music. Customers receive coupon for each peso spent on recorded music or sheet music. Customers may exchange 200 cupons and P20 for an Am/PM radio. Dolores pays P34 for each radio and estimates that 60% of the coupons will be redeemed.Dolores sales for 2010 were P 57,600,000- P 43,200,000 from musical instrument and sound equipment and P 14,400,000 from recorded music and sheet music. Replacement parts and labor for warranty work totaled P 1,312,000. 52,000 AM/FM radio was purchased and 9,600,000 coupons were redeemed in 2020.The accrual method is used by Dolores to account for the warranty and premium costs for financial reporting…
A merchant sells a product on credit for S/ 50,000 and offers to pay it to a client in three bills of equal nominal value and with maturities at 45, 75 and 105 days respectively, applying on them an APR of 30% with bimonthly capitalization. If this merchant plans to discount the bills in a bank 15 days after the sale is made, being the effective discount rate 2% per month, find: 1. The face value of the bills.2. The net cash value received on discounting the bills.3. Calculate the discount.
2. Assume F&S offers a “Fit 70” coupon book with 70 prepaid visits over the next year. F&S has learned that Fit 70 purchasers make an average of 60 visits before the coupon book expires. A customer purchases a Fit 70 book by paying $650 in advance, and for any additional visits over 70 during the year after the book is purchased, the customer can pay a $15 visitation fee per visit. F&S typically charges $15 to nonmembers who use the facilities for a single day.a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price.c. Prepare the journal entry to recognize revenue for the sale of a new Fit 70 book
Curt Rugs is holding a 2-week carpet sale at Jacob's Club, a local warehouse store. Curt Rugs plans to sell carpets for $1000 each. The company will purchase the carpets from a local distributor for $400 each, with the privilege of returning any unsold units for a full refund. Jacob's Club has offered Curt Rugs two payment alternatives for the use of space. Option 1: A fixed payment of $17400 for the sale period Option 2: 20% of total revenues earned during the sale period. Assume Curt Rugs will incur no other costs. Calculate the breakeven point in units for (a) option 1 and (b) option 2. At what level of revenues will CurtRugs earn the same operating income under either option? For what range of unit sales will Curt Rugs prefer Option 1? For what range of unit sales will Curt Rugs prefer Option 2? Calculate the degree of operating leverage at sales of 87 units for the two rental options. Briefly explain and interpret your answer to the above calculation
Socorro Company sells color television sets with a two-year repair warranty. The sale price for each set is P15,000. the average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in the first year and 40% in the second year. 2020 2021 Number of sets sold 300 500 Total payments for warranty repairs 40,000 150,000 Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journal entries in connection with the warranty using the "accrual" approach. 3. Determine the estimated warranty liability on December 31, 2021. 4. Analyze the estimated warranty account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.