At the end of the year, a company debits Pension Expense and credits Cash to reflect fully funded pension rights for its salaried employees.
The debit to the pension asset or obligation would result in a credit to cash, which might increase the asset or lower the liabilities (since there is a cash outflow to fund the pension asset).
How much do pensions cost? The amount that a business deducts from revenue to pay its responsibilities for employee pension liabilities is known as a pension expense. The cost of this payment depends on whether the underlying pension is a defined benefit or defined contribution plan.
Other non-cash expenses include LIFO accounting, pension, postretirement and postemployment benefits, amortization of premiums on hedging contracts deducted from net income, and LIFO accounting.
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