On January 1, 2017, BT&T Company enters into a 2-year contract with a customer for an unlimited talk and 10 GB data wireless plan for $70 per The contract includes a smartphone for which the customer pays $200. BT&T also sells the smartphone and monthly service plan separately, charging $700 for the smartphone and $65 for the monthly service for the unlimited talk and 10 GB data wireless plan.

Required:

1. Determine the transaction price for each performance obligation, assuming that BT&T Company allocates the transaction price based on stand-alone
2. Record the initial journal entry for BT&T Companys sale of a 2-year contract on January 1, 2017, and the monthly journal
3. On January 1, 2018, 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 (12 months). The unlimited talk and 2 GB data plan is priced at $50 per month, which is the BT&T current stand-alone price for this plan that is available to all customers. Provide BT&Ts new monthly revenue recognition journal entry.