Manhattan Park Adjusts Its Books Each Month and Closes Its

Multiple Choice

Manhattan Park adjusts its books each month and closes its books on December 31 each year. The trial balance at January 31, of the current year, before adjustments, follows:

-Refer to the above data. Employees are owed $1,200 for services since the last payday in January to be paid the first week of February. No adjustment was made for this item. As a result of this error:

A) Assets at January 31 are overstated.
B) January net income is overstated.
C) Liabilities at January 31 are overstated.
D) Owners' equity at January 31 is understated.