Question

In: Accounting

Crazy Computer Store sells a back-to-school bundle that consists of a laptop computer, printer, and tablet...

Crazy Computer Store sells a back-to-school bundle that consists of a laptop computer, printer, and tablet to a customer for $2,400. Crazy Computer also sells the products on a stand-alone basis for the following amounts: the laptop for $1,800, the printer for $350, and the tablet for $500. The customer receives a $250 discount for buying the three products as a bundle. Crazy Computer normally sells the laptop and printer as a package for a price of $1,900. The tablet is normally not discounted.

Required:

1. How should the transaction price be allocated among the products?
2. Prepare the journal entry when Crazy sells a back-to-school bundle for cash.

How should the transaction price be allocated among the products?

Laptop $____
Printer $____
Tablet $____

Solutions

Expert Solution

The Transaction price will be allocated among the products on the basis of each of their transaction price.
Laptop and Printer are sold together at $ 1,900.
Laptop 1,800.00
Printer      350.00
2,150.00
Price to be allocated to Laptop 1900/2150*1800
1590.70
Price to be allocated to Printer 1900/2150*350
309.30
Bundle Price 2,400.00
Less: Price Allocated to Laptop 1,590.70
Price Allocated to Printer 309.30
Price to be Allocated to tablet      500.00
The transaction price be allocated among the products:
Laptop 1,590.70
Printer 309.30
Tablet      500.00
Journal entry Dr Cr
For Sales
Cash 2,400.00
Sale of Laptop 1,590.70
Sale of Printer      309.30
Sale of Tablet      500.00

ekkarill92 answered 4 days ago
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