How do I record long term (5 years) pension payments? Our company must fund $1,400 a month to a union pension plan for five years.

ANSWER

The BIDaWIZ Team's Answer:

At the beginning of each year, you will debit a "pension expense," account, in the amount of $16,800, and credit

a "pension liability" account, in the same amount. When the monthly payment is remitted, you

will debit the "pension liabllity" account, and you will credit the "cash" account. This process will be

repeated,until the pension liability is fully funded.