Instructions Crazy Computer Store sells a back-to-school bundle that consists of
ID: 2588872 • Letter: I
Question
Instructions 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.Explanation / Answer
1.how should the transaction price be allocated among the products?
note: since it is mentioned that tablet is not sold at discounted price, we shall allocate its full price of $500 to it.
price allocated to laptop and printer will be = [stand alone price * (price of printer and laptop package) / (total of stand alone prices).}
total of stand alone prices = $1800 + $350
=>$2,150.
now,
price allocated to laptop = $1,800 * ($1900 /$2150)
=>$1,591...(rounded to nearest dollar)
price allocated to printer = $350 * (1900 / 1250)
=>$309...(rounded to nearest dollar).
the following is the required table:
2.the following is the required journal entry on sale fo the bundle for cash.
Laptop $1,591 Printer $309 tablet $500