Tom Timber, a 40-year old adult, works for Timberline, Inc., a logging company.

Question

Tom Timber, a 40-year old adult, works for Timberline, Inc., a logging company. timberline uses both compensation and service as a basis for allocating Timberline’s $20,000 annual contribution to Timberline’s profit sharing plan for its employees.

After studying Chapter 18 again, answer the following questions with explanations:

1. Can employees generally make contributions to profit sharing plans? Explain.

2. From the minicase above, how much would be allocated to Tom’s account if he received 40 units of credit for his 20 years of service and 160 units for $80,000 in earnings? Assume that the total units for all employees are 1,000.

Explanation / Answer

Tom Timber, a 40-year old adult, works for Timberline, Inc., a logging company.

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