5.

The following data relate to the operation of Kramer Co.s pension plan in 2015.

Service cost	$124,490
Actual return on plan assets	67,520
Amortization of prior service cost	59,080
Annual contributions	107,610
Benefits paid retirees	56,970
Average service life of all employees	25 years

The pension worksheet for 2014 is presented below.

KRAMER COMPANY Worksheet2014
General Journal Entries				Memo Record
Items		Annual Pension Expense	Cash	OCIPrior Service Cost	OCI Gain/Loss	Pension Asset/Liability				Projected Benefit Obligation	Plan Assets
Balance, Jan. 1, 2014	$253,200	Cr.		$685,750	Cr.	$432,550	Dr.
Service cost	$42,200	Dr.		42,200	Cr.
Interest cost	54,860	Dr.		54,860	Cr.
Actual return	37,980	Cr.		37,980	Dr.
Unexpected loss	5,275	Cr.	$5,275	Dr.
Amortization of PSC	73,850	Dr.	$73,850	Cr.
Contributions	$86,510	Cr.		86,510	Dr.
Benefits		31,650	Dr.	31,650	Cr.
Increase in PBO				91,785	Dr.			91,785	Cr.
Journal entry for 2014	$127,655	Dr.	$86,510	Cr.	73,850	Cr.	97,060	Dr.	64,355	Cr.
Accumulated OCI, Dec. 31, 2013	168,800	Dr.	0
Balance, Dec. 31, 2014	$94,950	Dr.	$97,060	Dr.	$317,555	Cr.		$842,945	Cr.	$525,390	Dr.

For 2015, Kramer will use the same assumptions as 2014 for the expected rate of returns on plan assets. The settlement rate for 2015 is 10%.

(a) Prepare a pension worksheet for 2015.(Round answers to 0 decimal places, e.g. 2,500.)

1. Felicia Rashad Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2006 through 2014 as follows. Income (Loss) $69,600 96,000 40,800 115,200 (360,000 ) 216,000 72,000 252,000 (144,000 ) 2006 2007 2008 2009 2010 2011 2012 2013 2014 Tax Rate 30 % 30 % 35 % 50 % 40 % 40 % 40 % 40 % 45 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized. What entries for income taxes should be recorded for 2010? (Credit account titles are automatically indented when amount is entered. Do not indent manually.) 2. Spamela Hamderson Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) Year 2012 2013 2014 2015 Pretax Income (Loss) $145,000 97,500 (295,000 ) 228,300 Tax Rate 35 % 35 % 40 % 40 % The tax rates listed were all enacted by the beginning of 2012. (a) Prepare the journal entries for the years 2012-2015 to record income tax expense (benefit) and income taxes payable (refundable) and the tax effects of the loss carryback and carryforward, assuming that at the end of 2014 the benefits of the loss carryforward are judged more likely than not to be realized in the future. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Dat Account Titles and e Explanation Debit Credit 201 2 201 3 201 4 201 5 3. The accounting records of Shinault Inc. show the following data for 2014. 1. Life insurance expense on officers was $8,700. 2. Equipment was acquired in early January for $337,000. Straight-line depreciation over a 5year life is used, with no salvage value. For tax purposes, Shinault used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $5,400. 4. Product warranties were estimated to be $51,400 in 2014. Actual repair and labor costs related to the warranties in 2014 were $10,600. The remainder is estimated to be paid evenly in 2015 and 2016. 5. Gross profit on an accrual basis was $147,300. For tax purposes, $80,200 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $5,700. 7. Pretax financial income was $793,500. The tax rate is 40%. (a) Prepare a schedule starting with pretax financial income in 2014 and ending with taxable income in 2014. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Schedule of Pretax Financial Income and Taxable Income for 2014 $ Pretax financial income Permanent differences Temporary differences Taxable income 4. Henning Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2014 in which no benefits were paid. 1 . 2 . 3 . The actuarial present value of future benefits earned by employees for services rendered in 2014 amounted to $61,470. The company's funding policy requires a contribution to the pension trustee amounting to $159,810 for 2014. As of January 1, 2014, the company had a projected benefit obligation of $978,200, an accumulated benefit obligation of $804,270, and a debit balance of $421,910 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $622,150 at the beginning of the year. The actual and expected return on plan assets was $56,720. The settlement rate was 10%. No gains or losses occurred in 2014 and no benefits were paid. 4 Amortization of prior service cost was $42,540 in 2014. Amortization of net gain or loss was . not required in 2014. (a) Determine the amounts of the components of pension expense that should be recognized by the company in 2014. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Components of Pension Expense $ $