Day two: the same student goes into the Coffee House and orders a large coffee in a campus$-$branded,

thermal coffee mug as part of a $$welcome back to school$$ daily special. As the student is focused on

sustainability, the student plans to use this mug daily for refills rather than using paper cups. The barista

pours the coffee into the mug and delivers it to the student. The cashier then collects $$7$ from the student.

Standalone selling prices are $$5$ for the coffee and $$3$ for the mug, so the student got a bargain on the

combined purchase. The student takes the coffee in the new mug and enjoys it while reading The Wall

Street Journal.

Requirements:

$$ Review ASC $606-10-25-19$ through $22$ and ASC $606-10-32-31$ through $32.$

$$ 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.