The Employees of Dew Drop Inn Get Paid Every Friday

Multiple Choice

The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday) .The total payroll is $5,000 per day of work.If the accounting period ends on Thursday of a given week,what adjustment must be made to the company's accounting records?

A) Decrease Cash by $20,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
B) Increase Salaries payable by $20,000 and increase shareholders' equity by recognizing Salaries expense for the same amount.
C) Increase Salaries payable by $20,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
D) No adjustment is necessary because there is no expense until the employees are paid on Friday.