Cowboy Computing sells a tablet computer called the CowboyNotebook. The $875 sales price of a CowboyNotebook Package includes the following five items:
One CowboyNotebook computer.
A 6-month limited warranty. This warranty guarantees that Cowboy 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 CowboyReader e-book reader for $420, a price that represents a 70% discount from the regular CowboyReader price of $600. It is expected that 25% of the discount coupons will be utilized.
A coupon to purchase a one-year extended warranty for $70. Customers can buy the extended warranty for $95 at other times if they do not use the $70 coupon. Cowboy estimates that 45% of customers will purchase an extended warranty.
Cowboy does not sell the CowboyNotebook without the limited warranty, option to purchase a CowboyReader, and the option to purchase an extended warranty, but estimates that if it did so, a CowboyNotebook alone would sell for $855.
Required:
1. & 2. Indicate below whether each of the five items is a separate performance obligation and allocate the transaction price of 90,000 CowboyNotebookPackages to the separate performance obligations in the contract.
3. Prepare a journal entry to record sales of 90,000 CowboyNotebook Packages.
	Requirements 1 and 2
Accounts	Item Description	Performance Obligation?		Stand Alone Price		Percentage of Total Standalone Price
No journal entry required	CowboyNotebook
Accounts payable	Limited 6-month warranty
Accounts receivable	Option to purchase a CowboyReader
Accumulated depreciation	Option to purchase extended warranty
Advertising expense	Total standalone price			$ -
Cash
Common stock	Item Description	Percentage of Total Stand Alone Price	*	Total Transaction Price	=	Allocated Contract Price
Cost of good sold	CowboyNotebook
Deferred revenue	Limited 6-month warranty
Deferred revenue-coupons	Option to purchase a CowboyReader
Deferred revenue-extended warranties	Option to purchase extended warranty
Depreciation expense	Total contract price					$ -
Income tax expense
interest expense
Interest revenue	Requirement 3
Inventory	General Journal	Debit		Credit
Land
Notes payable
Notes receivable
Retained earnings
Sales revenue