Buster Industries pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

A) debit Salaries Payable, $12,000; credit Cash, $12,000
B) debit Salary Expense, $12,000; credit Dividends, $12,000
C) debit Salary Expense, $12,000; credit Salaries Payable, $12,000
D) debit Dividends, $12,000; credit Cash, $12,000

Since the end of the fiscal period is on a Tuesday and the salaries are paid on Friday, there are two days’ worth of salaries that have been earned but not yet paid. Therefore, an adjusting entry needs to be made to recognize this expense and ensure that the liability is properly recorded. Debiting Salary Expense and crediting Salaries Payable for $12,000 (2 days’ worth of salaries) will accomplish this. Choice A is incorrect because Cash is already recorded when the salaries are paid on Friday. Choice B is incorrect because Dividends are not related to salaries. Choice D is incorrect because Dividends do not affect the recording of salaries.