On January 1, 2019, Vasby Software Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, Vasby retroactively gives credit to the date of hire for each employee. The service cost for 2019 is $8,000. The plan is not funded, and the discount rate is 10%. All employees were hired at age 28 and become eligible for full benefits at age 58. Employee C was paid $7,000 for postretirement healthcare benefits in 2019. On December 31, 2019, the accumulated postretirement benefit obligation for Employees B and C were $77,000 and $41,500, respectively. Additional information on January 1, 2019, is as follows:

Employee Status	Age		Accumulated
		Expected	Postretirement
		Retirement Age	Benefit Obligation
1. Employee	31	65	$14,000
2. Employee	55	65	70,000
3. Retired	67		45,000
			$129,000

Required:

1.	Compute the OPRB expense for 2019 if Vasby uses the average remaining service life to amortize the prior service cost.
2.	Prepare all the required journal entries for 2019 if the plan is not funded.

CHART OF ACCOUNTS

Vasby Software Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
252	Accrued Postretirement Benefit Cost
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings
916	Other Comprehensive Income: Prior Service Cost

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
523	Postretirement Benefit Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

1. Compute the OPRB Expense for 2019 if Vasby uses the average remaining service life to amortize the prior service cost.

OPRB expense

2. Prepare the entries to record:

1.	The accrued postretirement benefit on January 1.
2.	The postretirement benefit expense for 2019 on December 31.
3.	The adjustment for double counting of amortization of prior service cost on December 31.
4.	The payments to retired employees during 2019 on December 31.

General Journal Instructions

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GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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