Final answer:
On January 7, the correct entry to record the payment of $1,000 in salaries after a reversing entry was made for accrued salaries should include a debit to salaries expense of $700. That's because the $300 accrued on December 31 has been adjusted on January 1.
Step-by-step explanation:
The question is asking about the correct journal entry for the payment of salaries after reversing entries have been made at the beginning of the period for accrued salaries from the previous period. When the company accrues salaries of $300 on December 31, it recognizes the expenses incurred but not yet paid. On January 1, the company makes a reversing entry, effectively cancelling out the accrual on its books.
On January 7, the company pays salaries of $1,000, which is the total salary for the current period. Since the reversing entry was made, the initial $300 accrual is removed. Therefore, the company should only record the actual salaries expense for the current period. The correct entry to record would be option B: a debit to salaries expense of $700 and a credit to cash/bank for $1,000. The $700 represents the net salary expense for the current pay period after accounting for the previously accrued $300 (i.e., $1,000 - $300).