The City of Shipley maintains an Employee Retirement Funda single-employer, defined benefit plan that provides annuity and disability benefits. The fund is financed by a process that makes actuarially determined contributions from the citys general fund and by contributions that are made by the employees. The general fund is handling the administration of the retirement fund and it does not have any administrative expenses. The Statement of Net Assets for the Employees Retirement Fund as of July 1, 2011, is shown below.

City of Shipley

Employees Retirement Fund

Statement of Net Assets

As of July 1, 2011

Assets

Cash $60,000

Accrued Interest Receivable 160,000

Investments, at fair value Bonds 5,500,000

Common Stock 1,600,000

Total Assets $7,320,000

Liabilities Accounts Payable and Accrued Expenses 430,000

Net Assets Held in Trust for Pension Benefits $ 6,890,000

The following transactions took place during the fiscal year 2012.

1. The interest receivable on investments was collected in cash.

2. Member contributions in the amount of $460,000 were received in cash; the citys general fund also contributed $700,000 in cash.

3. Annuity benefits of $780,000 and disability benefits of $200,000 were recorded as liabilities.

4. Accounts payable and accrued expenses in the amount of $820,000 were paid in cash.

5. Interest income of $320,000 and dividends in the amount of $60,000 were received in cash.

6. Bond interest income of $160,000 was accrued at the end of year.

7. Refunds of $150,000 were made in cash to terminated, nonvested participating employees.

8. Common stocks, which are carried at a fair value of $500,000, were sold for $472,000. The amount of the sales price of the stock plus an additional $360,000 was invested in stocks.

9. As of the end of the fiscal year, June 30, 2012, a determination has been made that the fair value of the stocks held by the pension plan had decreased by $60,000; the fair value of bonds had increased by $35,000.

10. Temporary accounts for the year were closed.

Instructions:

a. Record the transactions on the books of the Employees Retirement Fund.

b. Prepare a Statement of Changes in Net Assets for the Employees Retirement Fund for the Year Ended June 30, 2012.

c. Prepare a Statement of Net Assets for the Employees Retirement Fund as of June 30, 2012.

d. A city council member asked you the following question: What are some of the differences between a defined benefit plan and a defined contribution plan? What are some of the accounting issues that the city faces when accounting for defined benefit plans as compared to a defined contribution plan?

Please do not copy from chegg otherwise i have to report the answer. Explain the answer throughly with showing each step of the calculation.