Flagg records adjusting entries at its December 31 year end.At December 31,employees had earned $12,000 of unpaid and unrecorded salaries.The next payday is January 3,at which time $30,000 will be paid.Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.
A)Debit Salaries expense $12,000;credit Salaries payable $12,000.
B)Debit Salaries expense $18,000;debit Salaries payable $12,000;credit Cash $30,000.
C)Debit Salaries payable $18,000;credit Cash $18,000.
D)Debit Salaries payable $12,000,credit Salaries expense $12,000.
E)Debit Salaries expense $18,000;credit Salaries payable $18,000.

Question

Quizplus · Accepted Answer

The adjusting entry made on December 31 recorded the expenses for the earned but unpaid salaries. To reverse this entry, the opposite journal entry should be made on January 1, which is a debit to Salaries Payable and a credit to Salaries Expense. The amount to be adjusted is $12,000, which is the amount of unpaid and unrecorded salaries at December 31. Therefore, choice D is the correct answer.

Flagg Records Adjusting Entries at Its December 31 Year End