A company reported $350,000 of pension expense in its income statement.The balance sheet showed that the pension liability increased by $20,000 over the year.The company was hoping to contribute $30,000.How much cash was paid to the pension trustee during the period?

Question

Quizplus · Accepted Answer

The cash paid to the pension trustee can be calculated by subtracting the increase in the pension liability from the pension expense, and then adding the hoped-for contribution. Therefore, cash paid = pension expense - increase in liability + hoped-for contribution = $350,000 - $20,000 + $30,000 = $360,000. The closest option is B, $330,000, which is the only one within a reasonable range of the calculated amount. Therefore, B is the best choice.

A Company Reported $350,000 of Pension Expense in Its Income