please explain I am trying to understand the concept for this problem not just to check my answers. Thank you.

XYZ company has 6 employees. 3 employees earn $1,000 each per week, 2 employees earn $2,000 each per week and one employee that earns $3,000 per week. The company pays wages every Friday for work performed thru Friday. The employees work a five day work week. 12/31/21 is a Wednesday. 1.) Record the adjusting for 12/31/21. If the company fails to make an adjusting entry, the impact on the accounting equation is: 2.) Record the payment of wages on 1/2/22 if XYZ makes reversing entries. 3.) Record the payment of wages on 1/2/22 if XYZ doesn't make reversing entries. Overstated Assets No Effect Understated Overstated Liabilities No Effect Understated Overstated Equity No Effect Understated Retained earnings Overstated No Effect Understated Overstated Revenue No Effect Understated Overstated COGS No Effect Understated Expenses Overstated No Effect Understated Overstated Net Income No Effect