During 2012, Transit Airlines paid salary expense of $42.4 million. At December 31, 2012, Transit accrued salary expense of $2.2 million. Transit then paid $2.2 million to its employees on January 3, 2013, the company’s next payday after the end of the 2012 year. For this sequence of transactions, show what Transit would report on its 2012 income statement and on its balance sheet at the end of 2012.
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