On January 1, Year 1, 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 smart phone for which the customer pays $299.00. Loud also sells the smart phone and monthly service plan separately, charging $659.00 for the smart phone and $70.00 for the monthly service for the unlimited talk and 5 GB data wireless plan. On July 1, Year 1, 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 Loud's current stand-alone price for this plan that is available to all customers. Loud has appropriately determined that the modification should be accounted for prospectively. Required: 1. How should Loud account for this contract modification? 2. Provide Loud's new monthly revenue recognition journal entry.