Flagg records adjusting entries at its December 31 year-end. At December 31, employees had earned $8000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $20,000 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; debit Salaries payable $8000; credit Cash $20,000.
B. Debit Salaries expense $8000; credit Salaries payable $8000.
C. Debit Salaries expense $12,000; credit Salaries payable $12,000.
D. Debit Salaries payable $12,000; credit Cash $12,000.
E. Debit Salaries payable $8000, credit Salaries expense $8000.
Answer: E
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