Overview of the Accounting Cycle Fargus Corporation has established a seven-step sequence in the accounting cycle for its payroll department; however, the steps were scrambled the last time they were printed out. You have been asked to place the steps in the proper sequence.

1. Close out the balance in each of the payroll expense accounts at the end of the period.

. Record the amount paid as an expense and a reduction in cash.

3. Determine which payroll expense account will be increased by each payment.

4. Prepare a listing of all account balances.

5. Receive payroll documents showing the amount paid to each employee.

6. Deduct payroll expense as an operating cost in the income statement for the month of January.

7. Add the amounts assigned to each of the payroll expense accounts to the existing balances in those accounts.