on may 1, 2026, varga tech services signed a $6,000 consulting contract with shaffer holdings. the contract…
on may 1, 2026, varga tech services signed a $6,000 consulting contract with shaffer holdings. the contract requires varga to provide computer technology support services on a continuous basis over the period from may 1, 2026, to april 30, 2027, with shaffer paying the entire $6,000 on may 1, 2026. record the journal entries for varga on may 1 and december 31, 2026. note: if no entry is required for a transaction or event, select \no journal entry required\ in the first account field. view transaction list journal entry worksheet 1 2 record the cash received by varga tech services. note: enter debits before credits. date general journal debit credit may 01, 2026
Answer
Explanation:
Step1: Record cash receipt on May 1, 2026
When Varga receives the $6,000 cash, cash is debited (as it increases) and unearned service revenue is credited (since the services have not been provided yet).
| Date | General Journal | Debit | Credit |
|---|---|---|---|
| May 01, 2026 | Cash | 6000 | |
| Unearned Service Revenue | 6000 |
Step2: Recognize revenue for the period from May - December 2026
The service period is 12 months from May 1, 2026 - April 30, 2027. The number of months from May - December 2026 is 8 months. Monthly revenue = $\frac{6000}{12}=500$. Revenue for 8 months = $500\times8 = 4000$. We debit unearned service revenue and credit service revenue.
| Date | General Journal | Debit | Credit |
|---|---|---|---|
| December 31, 2026 | Unearned Service Revenue | 4000 | |
| Service Revenue | 4000 |
Answer:
May 01, 2026:
| Date | General Journal | Debit | Credit |
|---|---|---|---|
| May 01, 2026 | Cash | 6000 | |
| Unearned Service Revenue | 6000 |
December 31, 2026:
| Date | General Journal | Debit | Credit |
|---|---|---|---|
| December 31, 2026 | Unearned Service Revenue | 4000 | |
| Service Revenue | 4000 |