Cullumbers Agency sells an insurance policy offered by Capital Insurance Company for a commission of $94 on January 2, 2020. In addition, Cullumber will receive an additional commission of $12 each year for as long as the policyholder does not cancel the policy. After selling the policy, Cullumber does not have any remaining performance obligations. Based on Cullumbers significant experience with these types of policies, it estimates that policyholders on average renew the policy for 4.5 years, which results in an expected policy life of 5.5 years. It has no evidence to suggest that previous policyholder behavior will change.

(a)

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Your answer is correct.

Determine the transaction price of the arrangement for Cullumber, assuming 70 policies are sold. (Round answer to 0 decimal places, e.g. 5,125.)

Transaction price

$

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(b)

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Your answer is incorrect.

Determine the revenue that Cullumber will recognize in 2020. (Round answer to 0 decimal places, e.g. 5,125.)

Revenue

$