On January 1, 2021 Cougar Company, enters into a contract to sell 8,500 tons of fuel to Saluki Co., at a fixed
price of $235,000, to be settled by a cash payment on January 1. Delivery is scheduled for February 1, 2021.
As part of the contract, the seller offers a 40% discount coupon to Saluki for any purchases in the next six
months. Based on experience, Cougar Company estimates a 70% probability that Saluki will redeem the 40%
discount voucher, and that the coupon will be applied to $60,000 of purchases. The stand-alone selling price
for the fuel in this transaction is $30 per ton.
Required:
(Round percentages to 1 decimal place. For example, 1.46% would be 1.5%. Round dollars to the
nearest whole dollar.)
1. Prepare the journal entry that Cougar Company would record on January 1, 2021.
2. Prepare the journal entry that Cougar Company would record on February 1, 2021, when the fuel is delivered
