Final answer:
The adjusting entry for accrued but unpaid salaries of $8,400 is to debit Salaries Expense and credit Salaries Payable.
Step-by-step explanation:
The correct adjusting entry to record accrued but unpaid employee salaries of $8,400 on December 31 would involve a debit to Salaries Expense and a credit to Salaries Payable. The entry would appear as follows in the company's journal:
- Debit Salaries Expense $8,400
- Credit Salaries Payable $8,400
This entry reflects the accrual basis of accounting, wherein expenses are recognized when incurred, rather than when paid. By making this entry, the company is recognizing the salary expense that has been incurred during the current period, even though the cash payment has not yet been made.