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 payable $12,000, credit Salaries expense $12,000.
B) Debit Salaries expense $18,000; debit Salaries payable $12,000; credit Cash $30,000.
C) Debit Salaries expense $12,000; credit Salaries payable $12,000.
D) Debit Salaries payable $18,000; credit Cash $18,000.
E) Debit Salaries expense $18,000; credit Salaries payable $18,000.

Question

Quizplus · Accepted Answer

The reversing entry on January 1 should debit Salaries payable and credit Salaries expense for the amount accrued on December 31, which is $12,000.

Flagg Records Adjusting Entries at Its December 31 Year End