Bob Reynolds operates a real estate business. A trial balance on April 30, 2014, before any adjusting entries are recorded, appears as follows:
Other data
a. The monthly insurance cost is $50.
b. Office supplies on hand on April 30, 2014, amount to $180.
c. The office equipment was purchased on April 1, 2013. On that date, it had an estimated useful life of ten years.
d. On September 1, 2013, the automobile was purchased; it had an estimated useful life of five years.
e. A deposit is received in advance of providing any services for first-time customers. Amounts received in advance are recorded initially in the account Unearned Commissions. Based on services provided to these first-time customers, the balance in this account at the end of April should be $5,000.
f. Repeat customers are allowed to pay for services one month after the date of the sale of their property. Services rendered during the month but not yet collected or billed to these customers amount to $1,500.
g. Interest owed on the note payable but not yet paid amounts to $20.
h. Salaries owed but unpaid to employees at the end of the month amount to $2,500.
Required
1. Prepare in general journal form the necessary adjusting entries at April 30, 2014. Label the entries (a) through (h) to correspond to the other data.
2. Note that the unadjusted trial balance reports a credit balance in Accumulated Depreciation— Office Equipment of $5,000. Explain why the account contains a balance of $5,000 on April 30, 2014.