FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

What is the answer to the journal entries that are incorrect?

Problem 15-4 Relating pension concepts to pension accounting (LO 15-1, LO 15-2, LO 15-3) You have the following information related to Chalmers Corporation's pension plan: Use the PV of 1, PVAD of 1, and PVOA of 1 tables where appropriate. (Use the appropriate factor(s) from the tables provided.) a. Defined benefit, noncontributory pension plan. b. Plan initiation, January 1, 20X3 (no credit given for prior service). c. Retirement benefits paid at year-end with the first payment one year after retirement. d. Assumed discount rate of 7%. e. Assumed expected rate of return on plan assets of 9%. f. Annual retirement benefit equals years of credited service x 0.02 x highest salary. g. Chalmers made $1,200 contributions to the pension fund at the end of each year. h. The actual returns were $0 and $48 in 20X3 and 20X4, respectively. i. Information for Frank Bullitt, the firm's only employee, follows: Start date Expected retirement date. Expected number of payments during retirement Selected actual and expected salary levels: Date January 1, 20X0 January 1, 20X3 January 1, 20X4 January 1, 2017 Req 1 and 2 Req 3 and 4 Required: 1. Calculate the service cost and the interest cost components of pension cost for 20X3 and 20X4. 2. Calculate the PBO at the end of 20X3 and 20X4. 3. Compute the fair value of plan assets for 20X3 and 20X4. 4. Compute funded status at December 31, 20X3, and December 31, 20X4. 5. Calculate pension expense for 20X3 and 20X4. 6. Prepare the required journal entries for 20X3 and 20X4. No 1 2 3 4 Complete this question by entering your answers in the tabs below. |.. Prepare the required journal entries for 20X3 and 20X4. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar.) 5 Date 20X3 Salary Level 20X4 $22,000 27,000 30,000 75,000 20X4 20X3 20X4 Req 5 > Answer is complete but not entirely correct. Pension expense General Journal Pension asset (liability) Pension expense Pension asset (liability) Req 6 Pension asset (liability) Cash Pension asset (liability) Cash Other comprehensive income - net actuarial (g) Pension asset (liability) ✓ January 1, 20X0 December 31, 2017 ✓ ✓ < Req 5 (15 years from plan inception) 20 ✓ ✓ ♥ ✓ ✓ ✓ Debit 6,163 6,917 ✔ 0 X 1,200✔ 1,200 Req 6 > Credit 6,163 6,917 0x 1,200✔ 1,200✔
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Transcribed Image Text:Problem 15-4 Relating pension concepts to pension accounting (LO 15-1, LO 15-2, LO 15-3) You have the following information related to Chalmers Corporation's pension plan: Use the PV of 1, PVAD of 1, and PVOA of 1 tables where appropriate. (Use the appropriate factor(s) from the tables provided.) a. Defined benefit, noncontributory pension plan. b. Plan initiation, January 1, 20X3 (no credit given for prior service). c. Retirement benefits paid at year-end with the first payment one year after retirement. d. Assumed discount rate of 7%. e. Assumed expected rate of return on plan assets of 9%. f. Annual retirement benefit equals years of credited service x 0.02 x highest salary. g. Chalmers made $1,200 contributions to the pension fund at the end of each year. h. The actual returns were $0 and $48 in 20X3 and 20X4, respectively. i. Information for Frank Bullitt, the firm's only employee, follows: Start date Expected retirement date. Expected number of payments during retirement Selected actual and expected salary levels: Date January 1, 20X0 January 1, 20X3 January 1, 20X4 January 1, 2017 Req 1 and 2 Req 3 and 4 Required: 1. Calculate the service cost and the interest cost components of pension cost for 20X3 and 20X4. 2. Calculate the PBO at the end of 20X3 and 20X4. 3. Compute the fair value of plan assets for 20X3 and 20X4. 4. Compute funded status at December 31, 20X3, and December 31, 20X4. 5. Calculate pension expense for 20X3 and 20X4. 6. Prepare the required journal entries for 20X3 and 20X4. No 1 2 3 4 Complete this question by entering your answers in the tabs below. |.. Prepare the required journal entries for 20X3 and 20X4. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar.) 5 Date 20X3 Salary Level 20X4 $22,000 27,000 30,000 75,000 20X4 20X3 20X4 Req 5 > Answer is complete but not entirely correct. Pension expense General Journal Pension asset (liability) Pension expense Pension asset (liability) Req 6 Pension asset (liability) Cash Pension asset (liability) Cash Other comprehensive income - net actuarial (g) Pension asset (liability) ✓ January 1, 20X0 December 31, 2017 ✓ ✓ < Req 5 (15 years from plan inception) 20 ✓ ✓ ♥ ✓ ✓ ✓ Debit 6,163 6,917 ✔ 0 X 1,200✔ 1,200 Req 6 > Credit 6,163 6,917 0x 1,200✔ 1,200✔
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Calculation of PBO
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Computation of fair value of plant assets
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Rectified Journal Entry for year 20x4
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