Question

The pension plan for GL Inc. requires a contribution to the plan administrator equal to 11% of employee salaries. Salaries were $575,600 for the period. The journal entry to record the pension benefit would include a
a. credit to Cash for $63,316.

b. debit to Cash for $6,332.

c. debit to Pension Expense for $6,332.

d. credit to Salary Expense for $63,316.

Answer 1

Answer:

a. credit to Cash for $63,316.

Explanation:

Given;

Pension contribution by GL Inc. percentage = 11%

Salaries for the period = $575,600

Amount to be contributed = 11% × $575,600

                                            = $ 63,316.00  

To account for this, the required journal would be

Debit      Pension Expense        $ 63,316.00

Credit     Cash account              $ 63,316.00

The right option is a. credit to Cash for $63,316.