Ad Venture Ltd. provides a defined contribution pension plan for its employees.
Currently, the company has 40 full-time and 55 part-time employees. The pension plan requires the company to make anannual contribution of $2,000 per full-time employee, and $1,000 per part-time employee, regardless of their annual salary. In addition, employees can match the employer’s contribution in any given year.
At the beginning of the year, 10 full-time and 15 part-time employees elected to contribute to their pension plan by matching the company’s contribution. An equal amount of funds was withheld from the employee’s cheque in order to fund their pension contribution. Both the employee’s and employer’s contributions are sent to the plan trustee at year end.
(a) What amount of pension expense will the company report?
(b) Prepare a summary journal entry to record Ad Venture Ltd.’s payment to the plan trustee.