Instructions On January 1, 2019, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $64.00 per month. The contract includes a smartphone for which the customer pays $299.00. Loud also sells the smartphone and monthly service plan separately, charging $649.00 for the smartphone and $64.00 for the monthly service for the unlimited talk and 5 GB data wireless plan. On July 1, 2019. the customer realizes that she needs less data in her wireless plan and downgrades to the unlimited talk and 2 GB data plan for the remaining term of the contract (18 months). The unlimited talk and 2 GB data plan is priced at $45.00 per month. The $45.00 per month is Loud's current stand-alone price for this plan that is available to all customers, Required 1. How should Loud account for this contra o modification, 2. Provide Loud's new monthly revenue recognition journal ent Sed colored 1. How should loud account for miscono The contact mediciones not goods or services entre modification and secret How determine the appropriate accounting for modification the entily has the remaining goods and Services (mortosani distinct from the goods and services already provided to the customer and more of services On July the contractive as a remaining balance of $4500 X As a resulty has S1000 X o late to treat the sea 535.00 per month Po GENERAL JOU Sore 177 WELL MI 10.00 tiese HO - Shaded ceis mave te 1. How should Loud account for this contract modification? Additional Instruction The contract modification does not add goods or services to the arrangement, therefore, this modification cannot be treated as a separate contract. However, to determine the appropriate accounting for the modification, the entity has to assess whether the remaining goods and services (18 months of service) are distinct from the goods and services already provided to the customer (handset and 6 months of services) On July 1, the contract receivable has a remaining balance of 845.00 X As a result, the entity has S10.00 X to allocate to the remaining 18 months of service on $35.00 X per month Points: 3/8 PAGE GENERAL JOURNAL Score: 33/37 DATE ACCORMIUITA POST RET DCBIT CREDIT JU, 1 Case 45.00 Contract Recevable Sales Revenge Chart of Accounts ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Contract Receivable EXPENSES 500 Cost of Goods Sold 141 Inventory 152 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation 511 Insurance Expense 512 Utilities Expense LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Excpense 281 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings 2. Prepare the joumal entry to record the cash received for the monthly service plan on July 1. General Joumal Instructions How does greding work? PAGE 1 GENERAL JOURNAL Score: 33/37 DATE ACCOUNT TITLE POST RETI DEBIT CREDIT Cash 45.00 1 Contract Receivable 10.00 Sales Revenue 35.00 1. How should Loud account for this contract modification? Additional Instruction The contract modification does not add goods or services to the arrangement therefore, this modification cannot be treated as a separate contract. However, to determine th modification, the entity has to assess whether the remaining goods and services (18 months of service) are distinct from the goods and services already provided to the custome On July 1, the contract receivable has a remaining balance of $45.00 X As a result, the entity has $10.00 X to allocate to the remaining 18 months of service, or $35.00 X per month Instructions On January 1, 2019, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $64.00 per month. The contract includes a smartphone for which the customer pays $299.00. Loud also sells the smartphone and monthly service plan separately, charging $649.00 for the smartphone and $64.00 for the monthly service for the unlimited talk and 5 GB data wireless plan. On July 1, 2019. the customer realizes that she needs less data in her wireless plan and downgrades to the unlimited talk and 2 GB data plan for the remaining term of the contract (18 months). The unlimited talk and 2 GB data plan is priced at $45.00 per month. The $45.00 per month is Loud's current stand-alone price for this plan that is available to all customers, Required 1. How should Loud account for this contra o modification, 2. Provide Loud's new monthly revenue recognition journal ent Sed colored 1. How should loud account for miscono The contact mediciones not goods or services entre modification and secret How determine the appropriate accounting for modification the entily has the remaining goods and Services (mortosani distinct from the goods and services already provided to the customer and more of services On July the contractive as a remaining balance of $4500 X As a resulty has S1000 X o late to treat the sea 535.00 per month Po GENERAL JOU Sore 177 WELL MI 10.00 tiese HO - Shaded ceis mave te 1. How should Loud account for this contract modification? Additional Instruction The contract modification does not add goods or services to the arrangement, therefore, this modification cannot be treated as a separate contract. However, to determine the appropriate accounting for the modification, the entity has to assess whether the remaining goods and services (18 months of service) are distinct from the goods and services already provided to the customer (handset and 6 months of services) On July 1, the contract receivable has a remaining balance of 845.00 X As a result, the entity has S10.00 X to allocate to the remaining 18 months of service on $35.00 X per month Points: 3/8 PAGE GENERAL JOURNAL Score: 33/37 DATE ACCORMIUITA POST RET DCBIT CREDIT JU, 1 Case 45.00 Contract Recevable Sales Revenge Chart of Accounts ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Contract Receivable EXPENSES 500 Cost of Goods Sold 141 Inventory 152 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation 511 Insurance Expense 512 Utilities Expense LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Excpense 281 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings 2. Prepare the joumal entry to record the cash received for the monthly service plan on July 1. General Joumal Instructions How does greding work? PAGE 1 GENERAL JOURNAL Score: 33/37 DATE ACCOUNT TITLE POST RETI DEBIT CREDIT Cash 45.00 1 Contract Receivable 10.00 Sales Revenue 35.00 1. How should Loud account for this contract modification? Additional Instruction The contract modification does not add goods or services to the arrangement therefore, this modification cannot be treated as a separate contract. However, to determine th modification, the entity has to assess whether the remaining goods and services (18 months of service) are distinct from the goods and services already provided to the custome On July 1, the contract receivable has a remaining balance of $45.00 X As a result, the entity has $10.00 X to allocate to the remaining 18 months of service, or $35.00 X per month