Question: On the first day of the semester, a student walks into the University's Coffee House and orders a large coffee in a campus-branded, thermal coffee mug as part of a welcome back to school 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.
A. How does the five step process apply to this transaction?
B. Whatis the amount of revenue that should be recognized and also provide journal entries to record this transaction.