Background: Day one: a college student walks into the Coffee House on campus and orders a large cup of black coffee. The cashier takes the order and says it will cost $5. The student hands the cashier $5. The barista then pours the coffee into a large cup and hands it to the student. The student then hustles off to accounting class. Part III: Part II should be completed before beginning Part III. Background: a Day three: the same student goes into the Coffee House bringing in his coffee mug and orders a large coffee and a croissant. Standalone selling prices are $5 for the coffee and $2 for the croissant. The cashier tells the student they are out of croissants. The cashier then offers the student the large coffee and a coupon for two croissants (its typical business practice) for $7. The student pays the $7 to the cashier. The cashier gives the student a coupon for two croissants. The barista pours the coffee into the coffee mug and hands it to the student. The student then takes the coffee and the coupon and heads to the dorm to study for the upcoming accounting exam. The Coffee House sells a coupon for two croissants for $3.50. To increase visits, these coupons can be redeemed any date after the date of purchase. The Coffee House has limited experience with these coupons but, so far, these coupons have always been redeemed. Requirements: Review ASC 606-10-25-2 through 6. For each of the five steps: Describe how the revenue model applies to this transaction. For any step that is not applicable, simply indicate it is not applicable. Draw a conclusion as to whether the requirements for that step were complied with. As a final conclusion, determine the amount of revenue that should be recognized with detailed calculations and provide the journal entry to record the transaction. Background: Day one: a college student walks into the Coffee House on campus and orders a large cup of black coffee. The cashier takes the order and says it will cost $5. The student hands the cashier $5. The barista then pours the coffee into a large cup and hands it to the student. The student then hustles off to accounting class. Part III: Part II should be completed before beginning Part III. Background: a Day three: the same student goes into the Coffee House bringing in his coffee mug and orders a large coffee and a croissant. Standalone selling prices are $5 for the coffee and $2 for the croissant. The cashier tells the student they are out of croissants. The cashier then offers the student the large coffee and a coupon for two croissants (its typical business practice) for $7. The student pays the $7 to the cashier. The cashier gives the student a coupon for two croissants. The barista pours the coffee into the coffee mug and hands it to the student. The student then takes the coffee and the coupon and heads to the dorm to study for the upcoming accounting exam. The Coffee House sells a coupon for two croissants for $3.50. To increase visits, these coupons can be redeemed any date after the date of purchase. The Coffee House has limited experience with these coupons but, so far, these coupons have always been redeemed. Requirements: Review ASC 606-10-25-2 through 6. For each of the five steps: Describe how the revenue model applies to this transaction. For any step that is not applicable, simply indicate it is not applicable. Draw a conclusion as to whether the requirements for that step were complied with. As a final conclusion, determine the amount of revenue that should be recognized with detailed calculations and provide the journal entry to record the transaction
