Flagg Records Adjusting Entries at Its December 31 Year End

question 87

Multiple Choice

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.

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Definitions:

Historical Tax Rates

Past tax rates that have been applied to individuals or corporations, which can indicate trends and policy changes.

Deferred Tax Liability

A tax obligation that a company owes in the future due to timing differences between its taxable income and its accounting income.

Accelerated Depreciation

A method of depreciation that allows a business to write off the cost of an asset more quickly in the early years of its useful life.

Taxable Income

The amount of income used to determine an individual or corporation's income tax liability, after deductions and exemptions.