Question
Chapter 7- Problem 3-Arizona City Comprehensive Case Study Using the information and transactions below, complete the steps in the box to submit your assignment. Pension
Chapter 7- Problem 3-Arizona City Comprehensive Case Study
Using the information and transactions below, complete the steps in the box to submit your assignment.
Pension Trust Fund
Arizona City has only one Trust and Agency Fund. The city maintains and administers a defined benefit pension plan for police department and fire department personnel. The plan is financed from contributions by the city and from investment income.
Beginning 2018 Trial Balance
The January 1, 2018, trial balance for the Arizona City Police and Fire Pension Trust Fund is presented here:
Police & Fire Pension Trust Fund Trial Balance | Debit | Credit |
Cash | $ 125,000 | |
Investments | 1,280,000 | |
Accrued Interest Receivable | 8,500 | |
Due to Resigned Employees | $ 500 | |
Net PositionRestricted for Pension Benefits | 1,413,000 | |
Totals | $1,413,500 | $1,413,500 |
Transactions and Events2018
Employer contributions of $60,000 were received from the General Fund by the Police and Fire Pension Trust Fund, which is administered by the city. The citys net pension liability for its single-employer defined benefit pension plan increased from $75,000 to $92,000 at year end. Assume that the only deferred amount is a deferred inflow of resources from actual investment income of the pension plan exceeding the expected amount by $10,000 in the current year. None of the net pension liability is due and payable, and none is to be allocated to enterprise activities.
The city purchased investments costing $60,500 for the Police and Fire Pension Trust Fund with the contributions.
Refunds of $8,000, which included $500 accrued at the end of 2017, were paid to terminated employees. The amounts refunded relate to contributions made by the terminated employees prior to 2017 when the city increased its contributions and eliminated the requirement for employee contributions.
Administrative costs of $10,000 were incurred during the fiscal year. Of this amount, $9,000 was paid.
Retirement benefits of $76,000 were paid to retirees. Another $1,500 of retirement benefit payments was accrued at year end.
The accrued interest receivable of $8,500 from last year plus $60,000 of current year interest revenues were received.
Interest at year end was accrued, $63,000. The fair value of investments increased by $18,000.
Required Steps
- Prepare a worksheet for the Police and Fire Pension Trust Fund. Enter the effects of the following transactions and events in the appropriate columns of the worksheet.
- Enter the preclosing trial balance in the appropriate worksheet columns.
- Enter the preclosing trial balance amounts in the closing entry (operating statement data) and postclosing trial balance (balance sheet data) columns, as appropriate.
- Prepare the 2018 Statement of Changes in Net Position for the Police and Fire Pension Trust Fund.
- Prepare the year-end 2018 Statement of Net Position for the Police and Fire Pension Trust Fund.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started