Question
The City of Sweetwater maintains an Employees Retirement Fund, a single-employer defined benefit plan that provides annuity and disability benefits. The fund is financed by
The City of Sweetwater maintains an Employees Retirement Fund, a single-employer defined benefit plan that provides annuity and disability benefits. The fund is financed by actuarially determined contributions from the citys General Fund and by contributions from employees. Administration of the retirement fund is handled by General Fund employees, and the retirement fund does not bear any administrative expenses. The Statement of Fiduciary Net Position for the Employees Retirement Fund as of July 1, 2019, is shown here:
CITY OF SWEETWATER | |||
Employees Retirement Fund | |||
Statement of Fiduciary Net Position | |||
As of July 1, 2019 | |||
Assets | |||
Cash | $ | 137,000 | |
Accrued Interest Receivable | 57,800 | ||
Investments, at Fair Value: | |||
Bonds | 4,506,000 | ||
Common Stocks | 1,307,000 | ||
Total Assets | 6,007,800 | ||
Liabilities | |||
Accounts Payable and Accrued Expenses | 351,300 | ||
Fiduciary Net Position Restricted for Pensions | $ | 5,656,500 | |
During the year ended June 30, 2020, the following transactions occurred:
- The interest receivable on investments was collected in cash.
- Member contributions in the amount of $276,100 were received in cash. The citys General Fund also contributed $808,000 in cash.
- Annuity benefits of $734,000 and disability benefits of $164,000 were recorded as liabilities.
- Accounts payable and accrued expenses in the amount of $956,000 were paid in cash.
- Interest income of $242,000 and dividends in the amount of $34,100 were received in cash. In addition, bond interest income of $50,000 was accrued at year-end.
- Refunds of $84,000 were made in cash to terminated, nonvested participants.
- Common stocks, carried at a fair value of $506,000, were sold for $482,000. That $482,000, plus an additional $311,000, was invested in stocks.
- At year-end, it was determined that the fair value of stocks held by the pension plan had decreased by $48,000; the fair value of bonds had increased by $40,000.
- Nominal accounts for the year were closed.
Required: a. Record the transactions on the books of the Employees Retirement Fund. b. Prepare a Statement of Changes in Fiduciary Net Position for the Employees Retirement Fund for the year ended June 30, 2020. c. Prepare a Statement of Fiduciary Net Position for the Employees Retirement Fund as of June 30, 2020.
No | Transaction | General Journal | Debit | Credit |
---|---|---|---|---|
1 | 01 | Cashselected answer correct | 57,800selected answer correct | not attempted |
Accrued Interest Receivableselected answer correct | not attempted | 57,800selected answer correct | ||
2 | 02 | Cashselected answer correct | 1,084,100selected answer correct | not attempted |
AdditionsMember Contributionsselected answer correct | not attempted | 276,100selected answer correct | ||
AdditionsEmployer Contributionsselected answer correct | not attempted | 808,000selected answer correct | ||
3 | 03 | DeductionsAnnuity Benefitsselected answer correct | 734,000selected answer correct | not attempted |
DeductionsDisability Benefitsselected answer correct | 164,000selected answer correct | not attempted | ||
Accounts Payableselected answer correct | not attempted | 904,000selected answer incorrect | ||
4 | 04 | Accounts Payableselected answer correct | 956,000selected answer correct | not attempted |
Cashselected answer correct | not attempted | 956,000selected answer correct | ||
5 | 5a | Cashselected answer correct | 276,100selected answer correct | not attempted |
Accrued Interest Receivableselected answer incorrect | not attempted | not attempted | ||
AdditionsInterest Incomeselected answer incorrect | not attempted | 242,000selected answer incorrect | ||
AdditionsDividend Incomeselected answer correct | not attempted | 34,100selected answer correct | ||
|
Accounts that can be used:
- Annuity Benefits
- Decrease in FMV
- Disability Benefits
- Dividend Income
- Employer Contributions
- Fiduciary Net Position Beginning of Year
- Fiduciary Net Position End of Year
- Interest Income
- Member Contributions
- Refunds
|
Accounts that can be used:
- Accounts Payable and Accrued Expenses
- Accrued Interest Receivable
- Cash
- Contributions Receivable
- Investment in US Bonds
- Investment in US Securities
- Restricted for Pension Benefits
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