Flagg, inc. 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

Business

Norah Shaw

16 June, 01:56

Flagg, inc. 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.

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Answers (1)

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Haley · Answer 1

The correct answer is option D, debit salaries payable $12,000; credit salaries expense $12,000.

Explanation:

In the first, the December 31 salary expense accrual would have been passed by debiting salary expense account and by crediting salary payable account as at 31st December.

In reversing its effect, the earlier posting would need to be reversed by debiting salary payable account and crediting salary expense account.

It is clear from the options that option D fits in perfectly with my explanation.