PENCOMP?s balance sheet at December 31, 2020, is as follows.

Additional information concerning PENCOMP?s defined benefit pension plan is as follows.

Projected benefit obligation at 12/31/20........................................................$ 820.5Plan assets (fair value) at 12/31/20.....................................................................476.5Unamortized past service cost at 12/31/20.......................................................150.0Amortization of past service cost during 2021....................................................15.0Service cost for 2021..............................................................................................42.0Discount rate...........................................................................................................10%Expected rate of return on plan assets in 2021..................................................12%Actual return on plan assets in 2021...................................................................10.4Contributions to pension fund in 2021...............................................................70.0Benefits paid during 2021....................................................................................40.0Expected remaining service life of employees...................................................15.0Average period to vesting of prior service costs...............................................10.0Unamortized net loss due to changes in actuarial assumptionsand deferred net losses on plan assets at 12/31/20.........................................92.0Other information about PENCOMP is as follows.Salary expense, all paid with cash during 2021............................................$ 700.0Sales, all for cash...............................................................................................3,000.0Purchases, all for cash......................................................................................2,000.0Inventory at 12/31/21.......................................................................................1,800.0

Property originally cost $2,000 and is depreciated on a straight-line basis over 25 years with no residual value.

Interest on the note payable is 10% annually and is paid in cash on 12/31 of each year.

Dividends declared and paid are $200 in 2021.

AccountingPrepare an income statement for 2021 and a balance sheet as of December 31, 2021. Also, prepare the pension expense journal entry for the year ended December 31, 2021. Round to the nearest tenth (e.g., round 2.87 to 2.9).

AnalysisCompute return on equity for PENCOMP for 2021 (assume stockholders? equity is equal to year-end average stockholders? equity). Do you think an argument can be made for including some or even all of the change in accumulated other comprehensive income (due to pensions) in the numerator of return on equity? Illustrate that calculation. Principles Explain a rationale for why the FASB has (so far) decided to exclude from the current period income statement the effects of pension plan amendments and gains and losses due to changes in actuarial assumptions.

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PENCOMP, Inc. Balance Sheet As of December 31, 2020 Liabilities Assets Notes payable Pension liability $1,000 Cash $ 438 344 Inventory 1,800 Total liabilities 1,344 Total current assets 2,238 Stockholders' equity Common stock Retained earnings Accumulated other comprehensive income Plant and equipment Accumulated depreciation 2,000 2,000 (240) 896 (242) 1,760 Total stockholders' equity 2,654 Total assets $3,998 Total liabilities and stockholders' equity $3,998