Question
The Finer Things, Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2019, the following balances relate to this plan: Plan
The Finer Things, Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2019, the following balances relate to this plan:
Plan assets | $630,000 |
Projected benefit obligation | $520,000 |
AOCI - prior service cost | $48,000 |
AOCI - (gains) / losses | $100,000 |
The actuaries for The Finer Things provide the following information regarding the company's pension plan during 2019:
Service cost | $90,000 |
Settlement rate | 9% |
Actual return on plan assets | $55,000 |
Expected return on plan assets | 8% |
Prior service cost amortization | $13,000 |
Contributions | $160,000 |
Benefits paid to retirees | $85,000 |
Average service life remaining for all employees | 10 years |
Ending PBO due to changes in actuarial assumptions | $680,000 |
Open the following link in a separate tab, and then click "download" in the top right corner to save the worksheet on your own computer: Quiz 20 Pension WorksheetLinks to an external site.
Use this worksheet to determine the required 2019 journal entry for The Finer Things with respect to its pension. Once you have determined the full entry, indicate which of the following debits/credits will be recorded as part of the journal entry.
Group of answer choices:
- DEBIT: Pension Asset/Liability for $28,200
- CREDIT: Pension Asset/Liability for $28,200
- DEBIT: Pension Asset/Liability for $30,000
- CREDIT: Pension Asset/Liability for $30,000
- DEBIT: Pension Asset/Liability for $78,200
- CREDIT: Pension Asset/Liability for $78,200
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