Question

Yuri Co. operates a chain of gift shops. The company maintains a defined contribution pension plan for its employees. The plan requires quarterly installments to be paid to the funding agent, Whims Funds, by the fifteenth of the month following the end of each quarter. Assume that the pension cost is $162,600 for the quarter ended December 31.

Required:
a. Journalize the entry to record the accrued pension liability on December 31.

Answer 1

On December 31

Pension expense $162,600

To Unfunded pension liability $162,600

Step-by-step explanation:

The journal entry is shown below:

On December 31

Pension expense $162,600

To Unfunded pension liability $162,600

(Being the accrued pension liability is recorded)

For recording this journal entry we debited the pension expense as it increased the expense and credited the unfunded pension liability as it also increased the liabilities