Question
In: Accounting
Metlock Co. has the following postretirement benefit plan balances on January 1, 2020. Accumulated postretirement benefit...
Metlock Co. has the following postretirement benefit plan
balances on January 1, 2020.
| Accumulated postretirement benefit obligation | $2,239,000 | |
| Fair value of plan assets | 2,239,000 |
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2021, the company amends the plan so that prior service
costs of $177,000 are created. Other data related to the plan
are:
|
2020 |
2021 |
|||||
| Service costs | $75,000 | $85,000 | ||||
| Prior service costs amortization | 0 | 12,000 | ||||
| Contributions (funding) to the plan | 45,000 | 35,000 | ||||
| Benefits paid | 41,000 | 45,000 | ||||
| Actual return on plan assets | 142,000 | 119,000 | ||||
| Expected rate of return on assets | 8 | % | 6 |
% |
||
1. Prepare a worksheet for the postretirement plan in 2020.
2.Prepare any journal entries related to the postretirement plan that would be needed at December 31, 2020.
3.Prepare a worksheet for 2021
4.Prepare journal entries related to the postretirement plan as of December 31, 2021.
5. Indicate the postretirement-benefit–related amounts reported in the 2021 financial statements.
Solutions
Expert Solution
| Metlock Co. | ||||||
| General Journal Entries | Memo Record | |||||
| Annual Pension Expense | Cash | OCI-Gain/loss | Pension Assets/liability | Projected benefit obligation | Plan Assets | |
| Balance 1/1/2020 | $ - | $ -22,39,000.00 | $ 22,39,000.00 | |||
| Service Cost(given) | $ 75,000.00 | $ -75,000.00 | ||||
| Interest Cost($2239000*10%) | $ 2,23,900.00 | $ -2,23,900.00 | ||||
| Actual Return($2239000*10%) | $ -2,23,900.00 | $ 2,23,900.00 | ||||
| Contributions(given) | $ -45,000.00 | $ 45,000.00 | ||||
| Benefits(given) | $ 41,000.00 | $ -41,000.00 | ||||
| Assets loss(*) | $ 81,900.00 | $ -81,900.00 | ||||
| Journal entry in 2020 | $ 75,000.00 | $ -45,000.00 | $ 81,900.00 | $ -1,11,900.00 | $ -24,96,900.00 | $ 23,85,000.00 |
| Accumulated OCI December 31st,2020 | $ - | |||||
| Balance Dec 31st,2020 | $ 81,900.00 | $ -1,11,900.00 | $ -24,96,900.00 | $ 23,85,000.00 | ||
| Addition to Prior service cost amortization(given) | $ 1,77,000.00 | $ -1,77,000.00 | ||||
| Balance jan 1,2021 | $ -26,73,900.00 | |||||
| Service Cost(given) | $ 85,000.00 | $ -85,000.00 | ||||
| Interest Cost=($2673900*10%) | $ 2,67,390.00 | $ -2,67,390.00 | ||||
| Interest Revenue($2385000*10%) | $ -2,38,500.00 | $ 2,38,500.00 | ||||
| Contributions(given) | $ -35,000.00 | $ 35,000.00 | ||||
| Benefits(given) | $ 45,000.00 | $ -45,000.00 | ||||
| Assets loss(**) | $ 1,19,500.00 | $ -1,19,500.00 | ||||
| Journal Entry for 2021 | $ 2,90,890.00 | $ -35,000.00 | $ 1,19,500.00 | $ 3,75,390.00 | ||
| Accumulated OCI December 31st,2021 | $ 81,900.00 | |||||
| Balance Dec 31st,2021 | $ 2,01,900.00 | $ 2,63,490.00 | $ -29,80,070.00 | $ 24,95,300.00 | ||
| Positive figures=(DR) | ||||||
| Negative figures=(CR) | ||||||
| Pension assets/liability=(22390000-22390000) | 0 | |||||
| Assets Loss(*) | ($223900-$142000) | |||||
| Assets Loss(**) | ($238500-$119000) | |||||
| Journal Entry -2020 | ||||||
| General,Journal | Debit | Credit | ||||
| Other comprehensive income-(G/L) | $ 81,900.00 | |||||
| Pension Expense | $ 75,000.00 | |||||
| To Cash | $ 45,000.00 | |||||
| To Pension Assets/Liability | $ 1,11,900.00 | |||||
| Journal Entry -2021 | ||||||
| General,Journal | Debit | Credit | ||||
| Other comprehensive income-(G/L) | $ 1,19,500.00 | |||||
| Pension Expense | $ 2,90,890.00 | |||||
| To Cash | $ 35,000.00 | |||||
| To Pension Assets/Liability | $ 3,75,390.00 | |||||
| Financial Statement | ||||||
| Year 2021 | ||||||
| Partial Income Statement | ||||||
| Pension Expense | $ 2,90,890.00 | |||||
| Comprehensive Income Statement | ||||||
| Net Income | ***** | |||||
| Other comprehensive income(loss) | ||||||
| Assets gain(loss) | $ -1,19,500.00 | |||||
 ekkarill92 answered 1 year agoRelated SolutionsNovak Co. has the following defined benefit pension plan balances on January 1, 2020. Projected benefit...Novak Co. has the following defined benefit pension plan
balances on January 1, 2020.
Projected benefit obligation 4555000
Fair value of plan assets 4555000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2021, the company amends its pension agreement so that
prior service costs of $599,000 are created. Other data related to
the pension plan are:
2020
2021
Service cost
149,000
170,000
Prior service cost amortization
0
91,000
Contributions (funding) to the plan
201,000
183,000...
On January 1, 2020, Ivanhoe Company has the following defined benefit pension plan balances. Projected benefit...On January 1, 2020, Ivanhoe Company has the following defined
benefit pension plan balances.
Projected benefit obligation
$4,420,000
Fair value of plan assets
4,260,000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2021, the company amends its pension agreement so that
prior service costs of $506,000 are created. Other data related to
the pension plan are as follows.
2020
2021
Service cost
$151,000
$176,000
Prior service cost amortization
0
92,000
Contributions (funding) to the plan...
On January 1, 2020, Sage Company has the following defined benefit pension plan balances. Projected benefit...On January 1, 2020, Sage Company has the following defined
benefit pension plan balances.
Projected benefit obligation$4,571,000
Fair value of plan assets4,210,000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2021, the company amends its pension agreement so that
prior service costs of $492,000 are created. Other data related to
the pension plan are as follows.
2020
2021
Service cost
$152,000 $179,000
Prior service cost amortization
0 89,000
Contributions (funding) to the plan
236,000 285,000...
On January 1, 2020, Tamarisk Company has the following defined benefit pension plan balances. Projected benefit...
On January 1, 2020, Tamarisk Company has the following defined
benefit pension plan balances.
Projected benefit obligation
$4,460,000
Fair value of plan assets
4,150,000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2021, the company amends its pension agreement so that
prior service costs of $503,000 are created. Other data related to
the pension plan are as follows.
2020
2021
Service cost
$150,000
$182,000
Prior service cost amortization
0
92,000
Contributions (funding) to the plan...
On January 1, 2020, Harrington Company has the following defined benefit pension plan balances. Projected benefit...On January 1, 2020, Harrington Company has the following defined
benefit pension plan balances.
Projected benefit obligation
$4,500,000
Fair value of plan assets
4,200,000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2021, the company amends its pension agreement so that
prior service costs of $500,000 are created. Other data related to
the pension plan are as follows.
2020
2021
Service cost
$150,000
$180,000
Prior service cost amortization
0
90,000
Contributions (funding) to the plan...
Pronghorn Co. provides the following information about its postretirement benefit plan for the year 2020. Service...Pronghorn Co. provides the following information about its
postretirement benefit plan for the year 2020.
Service cost
$87,700
Prior service cost
amortization
3,200
Contribution to the plan
60,500
Actual and expected return on plan
assets
62,100
Benefits paid
39,000
Plan assets at January 1, 2020
704,000
Accumulated postretirement benefit
obligation at January 1, 2020
763,900
Accumulated OCI (PSC) at January 1,
2020
101,900
Dr.
Discount rate
9
%
Prepare a worksheet inserting January 1, 2020, balances, showing
December 31, 2020,...
On January 1, 2020, McGee Co. had the following balances: Projected benefit obligationOn January 1, 2020, McGee Co. had the following balances:
Projected
benefit
obligation
$7,800,000
Fair value of
plan
assets
7,800,000
Other data related to the pension plan for 2020:
Service
cost
315,000
Contributions
to the
plan
459,000
Benefits
paid
450,000
Actual return
on plan
assets
444,000
Settlement
rate
9%
Expected rate
of
return
6%
No prior
service cost, no prior OCI gains/losses
Required:
(a) Prepare the journal entry to record
pension...
On January 1, 2021, Pharoah Co. has the following balances: Projected benefit obligation Fair value of plan assetsOn January 1, 2021, Pharoah Co. has the following balances:
Projected benefit obligation $4800000
Fair value of plan assets 4200000
The settlement rate is 10%. Other data related to the pension plan for 2021 are:
Service cost $312000
Amortization of prior service costs 68000
Contributions 352000
Benefits paid 327000
Actual return on plan assets 344000
Amortization of net gain 23200
The balance of the projected benefit obligation at December 31, 2021 is
$5265000.
$5280000.
$5100000.
$5592000.
Range Co. offers a postretirement benefit plan. Range estimates the following benefit payments for Reg Vick...Range Co. offers a
postretirement benefit plan. Range estimates the following benefit
payments for Reg Vick after he retires on January 1, 2024: 2024 and
2025,
$18,200 per year;
2026, $32,100; 2027 through 2029, $25,800 per year. Assume end-
of-year payments.
On December 31, 2016,
Vick has completed 12 of his 16 years of eligibility. The discount
rate is 5.15%. The plan is unfunded (no plan assets). Use the
following present value factors for a lump sum payment of $1...
On January 1, 2017, Larkspur Company has the following defined benefit pension plan balances. Projected benefit...On January 1, 2017, Larkspur Company has the following defined
benefit pension plan balances. Projected benefit obligation
$4,571,000 Fair value of plan assets 4,210,000 The interest
(settlement) rate applicable to the plan is 10%. On January 1,
2018, the company amends its pension agreement so that prior
service costs of $492,000 are created. Other data related to the
pension plan are as follows. 2017 2018 Service cost $152,000
$179,000 Prior service cost amortization 0 89,000 Contributions
(funding) to the plan...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
ADVERTISEMENT
|