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 $68.00 per month. The contract includes a smartphone for which the customer pays \$289.00. Loud also sells the smartphone and monthly service plan separately, charging $649.00 for the smartphone and $68.00 for the monthly service for the unlimited talk and 5GB 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 2GB data plan for the remaining term of the contract ( 18 months). The unlimited talk and 2GB data plan is priced at $51.00 per month. The $51.00 per month is Loud's current stand-alone price for this plan that is avallable to all customers. Required: 1. How should Loud account for this contract modification? 2. Provide Loud's new monthly revenue recognition journal entry. CHART OF ACCOUNTS Loud Company General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Contract Receivabl 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 1. How should Loud account for this contract modification? Additional Instruction The contract modification add goods or services to the arrangement, therefore, this modification 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 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, per month. 2. Prepare the journal entry to record the cash recelved for the monthly service plan on July 1. General Joumal instructions