The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is
A) debit Salary Expense; credit Cash
B) debit Pension Expense; credit Unfunded Pension Liability
C) debit Pension Expense; credit Unfunded Pension Liability and Cash
D) debit Pension Expense; credit Cash

Question

Quizplus · Accepted Answer

The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is to debit Pension Expense (which reflects the cost of providing the pension benefits) and credit Cash (which reflects the payment made to the pension trust to fully fund the benefits). Therefore, choice D (debit Pension Expense; credit Cash) is the correct answer.

The Journal Entry a Company Uses to Record Fully Funded