Problem 1: At the end of the fiscal year, an adjusting entry was made for accrued salaries of $2,000. The salaries for one week, $4,250, were paid on the first Friday of the new fiscal period. When the weekly salaries are paid on the first Friday of the new accounting period, what will be the general journal entry?
A. Salaries Expense, debit, $4,250; Cash, credit, $4,250.
B. Salary Expense, debit, $2,000; Cash, credit, $2,000.
C. Salaries Expense, debit, $4,250; Salaries Payable, credit, $4,250.
D. Salary Expense, debit, $2,250; Salaries Payable, debit, $2,000; Cash, credit, $4,250.
E. None of the journal entries shown above.
Problem 2: A business rented space in an office building on October 1, at $600 per month, paying 9 months of rent in advance. The bookkeeper recognized a prepaid asset of $5,400 when the payment was made. No year-end adjustment was recorded. As a consequence of not recording the required adjustment, which of following occurred?
A. Expenses were overstated and assets were understated.
B. Expenses were understated and assets were overstated.
C. Expenses were overstated and assets were overstated.
D. Expenses were understated and assets were understated.
E. None of the above.