On January 1, 2017, Loud Comapny enters into a 2 year contract with a cuswtomer for an unlimitied talk and 5Gb data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan.

Required

1. Calculate the transaction price for teh smartphone and unlimited talk and 5 GB data wireless plan assuming that Loud allocates consideration based on stand-alone prices.

2. Record the initial journal entry for Loud Company's sale of a 2 year contract on January 1, 2017, and the monthly journal entry.