ADMS 3595 Lecture Notes - Income Statement, Financial Statement, Longrun
ADMS 3595 Solutions to Self Practice Questions
EXERCISE 19-1
(a) Pension Contributions Payable ............................................. 29,300
Cash ........................................................................... 29,300
(b) Pension Expense for December 2017:
$276,100 x 7% = $19,327
(c) Current liability:
Pension Contributions Payable $ 33,132
($276,100 X 5%) + $19,327
This assumes amounts for previous months were remitted as required each month.
At December 31, 2017, all that remains payable is the amount withheld from
employees in December and the required employer matching amount.
EXERCISE 19-3
(a) Defined benefit obligation, 1/1/17 $2,000,000
Interest cost ($2,000,000 X10%) 200,000
Current service cost 235,000
Past service 50,000
Benefits paid (100,000 )
Defined benefit obligation, 12/31/17 $2,385,000
(b) Plan assets, 1/1/17 $1,600,000
Actual return on plan assets 160,000
Contribution into plan 262,500
Benefits paid (100,000 )
Plan assets, 12/31/17 $1,922,500
(c) Pension expense, 2017
Current service cost $235,000
Past service cost
50,000
Net interest/finance cost
($2,000,000 – $1,600,000) x 10% 40,000
Pension expense for 2017 $325,000
(d) Pension Expense .............................................................. 325,000
Net Defined Benefit Liability/Asset ........................... 325,000
(Note: there are no actuarial gains or losses in 2017 related to the DBO or the plan
assets, so there are no remeasurement gains or losses to recognize in OCI)
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ADMS 3595 Solutions to Self Practice Questions
Net Defined Benefit Liability/Asset .................................... 262,500
Cash ......................................................................... 262,500
(e) Net defined benefit liability/(asset), 1/1/17 $ 400,000
Contribution (262,500 )
Pension expense 325,000
Net defined benefit liability/(asset), 12/31/17$ 462,500
Alternatively, the amount could also be reconciled as follows:
Defined benefit obligation $(2,385,000)
Plan assets at fair value 1,922,500
DBO in excess of plan assets (plan deficit) $(462,500 )
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3
EXERCISE 19-4
(a)
Rebek Corporation
Pension Work Sheet—2017
General Journal Entries
Memo Record
Annual
Pension
Expense
Cash
Net Def.
Benefit
Liab/Asset
Defined
Benefit
Obligation
Plan
Assets
Balance, 01/01/2017
Current service cost
Past service cost
*Net interest/finance cost
Contributions
Benefits paid
Expense entry
Contribution entry
Balance, 12/31/2017
235,000 Dr.
50,000 Dr.
40,000 Dr.
_______
325,000 Dr.
262,500 Cr.
_______0
00,000 Dr.
262,500 Cr.
400,000 Cr.
325,000 Cr.
262,500 Dr.
462,500 Cr.
2,000,000 Cr.
235,000 Cr.
50,000 Cr.
200,000 Cr.
100,000 Dr.
000,00
0 Dr.
2,385,000 Cr.
1,600,000 Dr.
160,000 Dr.
262,500 Dr.
100,000 Cr.
000,000 Dr.
1,922,500 Dr.
* $40,000 = ($2,000,000 - $1,600,000) X 10%.
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