On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB 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. On July 1, 2017, 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 $55 per month. The $55 per month is Louds current stand-alone price for this plan that is available to all customers. Required: 1. How should Loud account for this contract modification? 2. Provide Louds new monthly revenue recognition journal entry.

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 .___________
	As a result, the entity has ___________ to allocate to the remaining 18 months of service, or __________ per month.

GENERAL JOURNAL Score: 33/37

Date	Account	post ref	debit	credit
7/1	Cash		$55.00
	Contract Recievable			?????
	Sales Revenue			?????