The Freddie Corp

The Freddie Corp. pays its workers every Friday. This year, December 31 was a Wednesday. As of the end of the year, the employees had worked Monday, Tuesday, and Wednesday, and they had earned $3,000 for those three days. What adjustment, if any, is needed in this situation as of December 31?

A) A $3,000 increase to net assets and to owners' equity (salary expense is reduced by $3,000)
B) A $3,000 decrease in cash, and a $3,000 decrease to owners' equity (salary expense is increased by $3,000)
C) A $3,000 increase in salaries payable, and a $3,000 decrease in owners' equity (salary expense is increased by $3,000)
D) No adjustment is needed

Correct Answer:

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