On January 1, 2018, Loud Company enters into a 2year contract wath a customer for an unlimited tak and 5 GB data wereloss pian for $70.00 per month. The contract includes a smartphone for which the customer pays $299.00. Loud also seis the smartphone and monthly service plan soparately, charging \$659.00 for the smariphone and s70.00 for the monthyy sorvice for the unlimited tak and 5cB datn wireless plan. On July 1, 2019, the customer fealizes that she needs less data in her wireless plan and downgraden to the inlimited taik and 2GB data plan for the remahing term of the contraet (18 months). The unlimited tak and 208 data plan is priced at 553.00 per month. The 553.00 per moniti is Lovda current stand-alone price for this plan that is avaliabie to all customers. Required: 1. How should Loud account for this contract modification? 2. Provide Loud's new monthly revenue recognition journal entry: 1. How should Loud account for this contract modificafion? Addingn invtructen The contract modication determine the aporopriate accounting for the modification, the entty has to assets whether the remainirg goods and senices (t montha of senice) ase goods and sevices alreagy provised to the curtomet (handset and 6 morths of services). On Jay 1, the contract receivable has a remaining balance of As a result, the entey has to alocate to the remaning 18 morth of service, or 2. Prepare the joumal ontry to record the cash recoived for the monthy service plan on Juy 1 . General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Contract Receivable 141 Inventory EXPENSES 152 Prepaid Insurance 500 Cost of Goods Sold 181 Equipment 511 Insurance Expense 198 Accumulated Depreciation 512 Utilities Expense 521 Salaries Expense LIABILITIES 532 Bad Debt Expense 211 Accounts Payable 540 Interest Expense 231 Salaries Payable 541 Depreciation Expense 250 Unearned Revenue 559 Miscellaneous Expenses 261 Income Taxes Payable 910 Income Tax Expense EQUITY 311 Common Stock 331 Retained Earnings