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8 April, 16:24

Smith Corp. sponsors a 401 (k) plan for all its full-time employees. The company contributes 3% of each employee's salary to the plan. The total payroll for the year was $2 million. When recognizing the employer's annual contribution, Smith should

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  1. 8 April, 19:33
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    Employer's annual contribution = $60,000

    Explanation:

    Given:

    Employer's annual contribution = 3% = 3/100 = 0.03

    Total payroll = $2,000,000

    Computation:

    Employer's annual contribution = Total payroll * 0.03

    Employer's annual contribution = $2,000,000 * 0.03

    Employer's annual contribution = $60,000

    Journal Entry

    Date Account Title and Explanation Debit Credit

    Employee pension expense A/c Dr. $60,000

    Cash A/c Cr. $60,000

    (Being Employee pension expense debited)
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Home » Business » Smith Corp. sponsors a 401 (k) plan for all its full-time employees. The company contributes 3% of each employee's salary to the plan. The total payroll for the year was $2 million. When recognizing the employer's annual contribution, Smith should
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