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What entry should Cuppa Joe record at the transaction date

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Question - Facts - Cuppa Joe, a coffeehouse chain, sells beverages and premium homemade foods. The Company offers a popular loyalty program whereby customers can purchase 10 cups of coffee and get the 11th cup free. Customers must present their punch card with every purchase to earn punches toward a free cup. Cuppa Joe is a nonpublic company and has asked for your help applying the five-step revenue model to its customer sales.

Research Question: Assume a customer purchases a latte for $4.50 ($4. 85 with tax) and presents his loyalty punch card, earning a punch toward a free medium cup of coffee. How should Cuppa Joe record revenue for this transaction under ASC 606?

What entry should Cuppa Joe record at the transaction date?

Reference no: EM133057382

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