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 $70.00 per month. The contract includes a smartphone for which the customer pays $299.00. Loud also sells the smartphone and monthly service plan separately, charging $659.00 for the smartphone and $70.00 for the monthly service for the unlimited talk and 5 GB 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 2 GB data plan for the remaining term of the contract (18 months). The unlimited talk and 2 GB data plan is priced at $49.00 per month. The $49.00 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.

2. Prepare the journal entry to record the cash received for the monthly service plan on July 1.

General Journal Instructions

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GENERAL JOURNAL

Score: 30/37

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3