What Is the Total Pension Expense for the Following Plan

question 11

Multiple Choice

What is the total pension expense for the following plan after 5 years? "The plan requires the company to contribute $500 for each of its 1,000 employees.The plan hopes to accumulate enough funds so that retirees receive $20,000 in the future; the company has no obligation to guarantee the investment returns."

• A)$2,500
• B)$100,000
• C)$2,500,000
• D)$20,000,000

---

Definitions:

Recorded Increases

Entries in financial records that reflect an increase in assets, revenues, or any account that adds to the net worth or net income of a company.

Debited

In accounting, this term indicates that an entry has been made to the left side of an account, increasing assets or expenses, or decreasing equity, liability, or revenue.

Proprietorship

A business structure owned by a single individual, where the owner is personally responsible for the business's debts and liabilities.

Withdrawal

Removing funds from an account, or the act of taking money out from a partnership or investment, often referring to the distribution of assets to owners or partners.