Flagg records adjusting entries at its December 31 year end. At December 31, employees had earned $10,400 of unpaid and unrecorded salaries. The next payday is January 3, at which time $26,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.

Multiple Choice

Debit Salaries expense $10,400; credit Salaries payable $10,400.

Debit Salaries expense $15,600; debit Salaries payable $10,400; credit Cash $26,000.

Debit Salaries payable $15,600; credit Cash $15,600.

Debit Salaries payable $10,400, credit Salaries expense $10,400.

Debit Salaries expense $15,600; credit Salaries payable $15,600.