On December 1, 2017, AwakeAllNight Inc. sells 5,000 super caffeinated candy bars to Campus Grocers. The candy bars sell for $3 per bar. In addition, AwakeAllNight pays Campus Grocers a $900 “placement fee” to ensure that its candy bars are always stocked prominently by the cash register. The $900 is paid at the end of each month based on the results of random inspections of Campus Grocers by AwakeAllNight to ensure that the terms of the contract are being followed.
Required:
1. Determine the transaction price for AwakeAllNight’s revenue contract.
2. Prepare AwakeAllNight’s journal entries to recognize sales revenue and pay Campus Grocers the placement fee.