Question

In: Accounting

On January 1, 2016, Flash and Dash Company adopted a healthcare plan for its retired employees....

On January 1, 2016, Flash and Dash Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, the company retroactively gives credit to the date of hire for each employee. The following information is available about the plan:

Service cost $30,650
Accumulated postretirement benefit obligation (1/1/16) 159,600
Expected return on plan assets 0
Amortization of Prior service cost 11,400
Payments to retired employees during 2016 4,800
Interest rate 8%
Average remaining service period of active plan participants (1/1/16) 14 years

Required:

1. Compute the OPRB expense for 2016 if the company uses the average remaining service life to amortize the prior service cost.
2.

Prepare all the required journal entries for 2016 if the plan is not funded.

Prepare the entries to record:

1. the prior service cost on January 1.
2. the postretirement benefit expense for 2016 on December 31.
3. the payments to retired employees during 2016 on December 31.
4. the amortization of prior service cost on December 31.

PAGE 1

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

Analysis

Compute the OPRB expense for 2016 if the company uses the average remaining service life to amortize the prior service cost.

OPRB expense: _______________

Solutions

Expert Solution

ekkarill92 answered 6 months ago
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