Assume the same facts as in E17-5. 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 Loud's 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 Loud's new monthly revenue recognition journal entry.

17-5On January1, 2017, Loud company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $65.00 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. Required: 1 Calculate the transaction price for the smartphone and unlimited talk and 5 GB data wireless plan assuming that Loud allocates consideration based on stand alone prices. 2. Record the initial journal entry for Loud Company's sale of a 2-year contract on January 1, 2017, and the monthly journal entry.