Shown below is a summary of the annual payroll data of Rose Co.:
Wages and salaries expense (gross pay) |
| $2,250,000 |
Amounts withheld form employees’ pay: |
|
|
Income taxes | $170,000 |
|
Social Security and Medicare | $150,000 | 320,000 |
Payroll taxes expense: |
|
|
Social Security and Medicare | $150,000 |
|
Unemployment taxes | 58,000 | 208,000 |
Workers’ compensation premiums |
| 130,000 |
Group health insurance premiums (paid by employer) |
| 252,000 |
Contributions to employees’ pension plan (paid byemployer and fully funded) |
|
140,000 |
Cost of other postretirement benefits: |
|
|
Funded | $90,000 |
|
Unfunded | 120,000 | 210,000 |
|
|
|
Refer to the above data. When a company has a fully-funded pension plan:
a The dollar amounts paid to retirees are greater than the amounts recognized as pension expense by the employer.
b Pension expense is equal to the cash payments made to retirees during the current period.
c No pension expense is recognized in the income statement.
d It does not use the services of a trustee to operate the pension plan.
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