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 record the revenue recognized by varga tech services for the year ended december 31, 2026. note: enter debits before credits. date general journal debit credit december 31, 2026

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 record the revenue recognized by varga tech services for the year ended december 31, 2026. note: enter debits before credits. date general journal debit credit december 31, 2026

Answer

Explanation:

Step1: Analyze May 1, 2026 entry

On May 1, 2026, Varga receives $6,000 in advance for services to be provided over a 12 - month period. This is unearned revenue. The journal entry is to debit Cash (an asset increases) and credit Unearned Revenue (a liability increases).

Date General Journal Debit Credit
May 1, 2026 Cash $6,000
Unearned Revenue $6,000

Step2: Calculate revenue for 2026

The service period is from May 1, 2026 - April 30, 2027 (12 months). For the year - ended December 31, 2026, the number of months of service provided is 8 months (May - December). The monthly revenue is $\frac{6000}{12}=500$ per month. So the revenue recognized in 2026 is $500\times8 = 4000$.

Step3: Record December 31, 2026 entry

We need to debit Unearned Revenue (reduce the liability) and credit Service Revenue (recognize the revenue).

Date General Journal Debit Credit
December 31, 2026 Unearned Revenue $4,000
Service Revenue $4,000

Answer:

Date General Journal Debit Credit
May 1, 2026 Cash $6,000
Unearned Revenue $6,000
December 31, 2026 Unearned Revenue $4,000
Service Revenue $4,000