5. QUESTIONS 5 THROUGH 8 ARE BASED ON TABLE 3-1. Table 3-1 Talley, Inc. Pension Plan Year 7 Year 8 Service cost 15,000 17,000 Interest cost 9,000 10,000 Actual return on plan assets 7,500 10,800 Beginning of year plan assets 100,000 120,000 Settlement rate 8% 8%

What is Talley's pension expense to be recorded for Year 7? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.) (Points: 5) a) $15,000 b) $16,000 c) $16,500 d) $24,000 6. What is Talley's pension expense to be recorded for Year 8? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.) (Points: 5) a) $16,200 b) $17,000 c) $17,400 d) $27,000 7. What is Talley's deferred gain or loss from the return on plan assets for Year 7? (Points: 5) a) $0 b) $500 deferred gain c) $500 deferred loss d) Unknown from information provided

8. What is Talley's deferred gain or loss from the return on plan assets for Year 8? (Points: 5) a) $0 b) $1,200 deferred gain c) $1,200 deferred loss d) Unknown from information provided