(Learning Objective 2: Applying the revenue recognition principles and matching concept) During 20X6, Lufthansa Airlines paid salary expense of €38.3 million. At December 31, 20X6, Lufthansa accrued salary expense of €2.8 million. Lufthansa then paid €1.8 million to its employees on January 3, 20X7, the company’s next payday after the end of the 20X6 year.

For this sequence of transactions, show what Lufthansa would report on its 20X6 income statement and on its balance sheet at the end of 20X6.