Answered step by step
Verified Expert Solution
Question
1 Approved Answer
P20-2 Allison Co. has the following postretirement benefit plan balances on January 1, 2012. Accumulated Postretirement benefit obligation $2,535,000 Fair value of plan assets 2,535,000
| P20-2 Allison Co. has the following postretirement benefit plan balances on January 1, 2012. | |||||||||||||||
| Accumulated Postretirement benefit obligation | $2,535,000 | ||||||||||||||
| Fair value of plan assets | 2,535,000 | ||||||||||||||
| The interest (settlement) rate applicable to the plan is | 8% | On January 1, 2013, the company amends the plan | |||||||||||||
| so that prior service costs of | $185,000 | were created. Other data related to the pension plan are as follows: | |||||||||||||
| 2012 | 2013 | ||||||||||||||
| Service costs | $80,000 | $87,000 | |||||||||||||
| Prior service costs amortization | 0 | 13,000 | |||||||||||||
| Contributions (funding) to the plan | 47,000 | 38,000 | |||||||||||||
| Benefits paid | 41,000 | 43,000 | |||||||||||||
| Actual return on plan assets | 200,000 | 155,000 | |||||||||||||
| Expected rate of return on assets | 9% | 7% | |||||||||||||
| Instructions: | |||||||||||||||
| (a) Prepare a worksheet for the postretirement plan for 2012 and 2013. | |||||||||||||||
| Allison Co. | |||||||||||||||
| Pension Worksheet2012 and 2013 | |||||||||||||||
| General Journal Entries | Memo Record | ||||||||||||||
| Items | Annual Expense | DR/CR | Cash | DR/CR | OCI - Prior Service Cost | DR/CR | OCI - Gain/Loss | DR/CR | Pension Asset/ Liability | DR/CR | Accum Projected Benefit Obligation | DR/CR | Plan Assets | DR/CR | |
| Balance, Jan. 1, 2012 | |||||||||||||||
| Service cost | |||||||||||||||
| Interest cost | |||||||||||||||
| Actual return | |||||||||||||||
| Unexpected loss | |||||||||||||||
| Contributions | |||||||||||||||
| Benefits | |||||||||||||||
| Journal entry, 12/31/12 | |||||||||||||||
| Accum OCI, 12/31/11 | |||||||||||||||
| Balance, Dec. 31, 2012 | |||||||||||||||
| Additional PSC 1/1/2013 | |||||||||||||||
| Balance, Jan 1, 2013 | |||||||||||||||
| Service cost | |||||||||||||||
| Interest cost | |||||||||||||||
| Actual return | |||||||||||||||
| Unexpected loss | |||||||||||||||
| Amortization of PSC | |||||||||||||||
| Contributions | |||||||||||||||
| Benefits | |||||||||||||||
| Journal entry, 12/31/13 | |||||||||||||||
| Accum OCI, 12/31/12 | |||||||||||||||
| Balance, Dec. 31, 2013 | |||||||||||||||
| Area for calculations as desired | |||||||||||||||
| Area for calculations as desired | |||||||||||||||
| Area for calculations as desired | |||||||||||||||
| (b) Prepare any journal entries related to the postretirement plan that would be needed at December 31, 2012. | |||||||||||||||
| (c) Prepare any journal entries related to the postretirement plan as of December 31, 2013. | |||||||||||||||
| (d) Show the postretirement-benefitrelated amounts reported in the 2013 Income Statement and Balance Sheet. | |||||||||||||||
| Financial Statements-2013 | |||||||||||||||
| Income Statement | |||||||||||||||
| 0 | |||||||||||||||
| Comprehensive Income Statement | |||||||||||||||
| Net Income | XXXXX | ||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||
| 0 | |||||||||||||||
| 0 | |||||||||||||||
| 0 | 0 | ||||||||||||||
| Comprehensive Income | XXXXX | ||||||||||||||
| Balance Sheet | |||||||||||||||
| Liabilities | |||||||||||||||
| 0 | |||||||||||||||
| Stockholder's Equity | |||||||||||||||
| 0 | |||||||||||||||
| 0 | |||||||||||||||
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
Accounting Information Systems
Authors: George H. Bodnar, William S. Hopwood
8th Edition
0130861774, 9780130861771
