Required: Prepare a spreadsheet containing all relevant pension information for 20X7 and 20X8.
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- Lemur Corp. is going to pay three employees a year-end bonus. The amount of the year-end bonus and the amount of federal income tax withholding are as follows. Lemurs payroll deductions include FICA Social Security at 6.2%, FICA Medicare at 1.45%, FUTA at 0.6%, SUTA at 5.4%, federal income tax as previously shown, state income tax at 5% of gross pay, and 401(k) employee contributions at 2% of gross pay. Record the entry for the employee payroll on December 31.Pinecone Company has plan assets of 500,000 at the beginning of the current year and expects to earn 12% on its plan assets during the year. Pinecones service cost is 230,000, and its interest cost is 55,000. Compute Pine-cones pension expense for the current year.In 2019, Magenta Corporation paid compensation of 45,300 to the participants in a profit sharing plan. During 2019, Magenta Corporation contributed 13,200 to the plan. a. Calculate Magentas deductible amount for 2019. b. Calculate the amount of any contribution carryover from 2019.
- Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 3%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,660,000 as of 1 January 20X7. The company will pay $208,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8 20X7 20X8 Current service cost $ 121,000 $ 165,000 Actual return on fund assets − 7,200 Decrease in defined benefit obligation at year-end due to change in assumptions − 41,000 Payments to pensioners at end of year − 43,400 Required:Prepare a spreadsheet containing all relevant pension information for 20X7 and 20X8.Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 3%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,660,000 as of 1 January 20X7. The company will pay $208,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8 Required: Prepare a spreadsheet containing all relevant pension information for 20X7 and 20X8.Larson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2021, the following balances related to this plan. Plan assets (market-related value) $270,000 Projected benefit obligation 340,000 Pension asset/liability 70,000 Cr. Prior service cost 90,000 OCI—Loss 39,000 As a result of the operation of the plan during 2021, the actuary provided the following additional data for 2021. Service cost $45,000 Actual return on plan assets 27,000 Amortization of prior service cost 12,000 Contributions 65,000 Benefits paid retirees 41,000 Settlement rate 7% Expected return on plan assets 8% Average remaining service life of active employees 10 years Instructions Compute pension expense for Larson Corp. for the year 2021 by preparing a pension worksheet that shows the journal entry for pension expense. Indicate the pension amounts reported in the financial statements.
- . Phillip Company has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75,000; service cost, $18,000; interest cost, $5,000; benefits paid for the year, $9,000; ending PBO, $89,000; the expected return on plan assets, $10,000; and cash deposited with pension trustee, $17,000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a credit to the PBO for: A. $23,000. B. $17,000. C. $18,000. D. $13,000. .On January 1, 20X1, Cello Co. established a defined benefit pension plan for its employees. At January 1, 20X1, Cello estimated the service cost for 20X1 to be $45,000. At January 1, 20X2, it estimated 20X2 service cost to be $49,000. On the plan inception date, prior service credit was granted to employees for five years, the period of time between the company’s formation and plan inception. The prior service cost was estimated to be $650,000 at January 1, 20X1. Cello uses a 10% discount rate and assumes a return on plan assets of 9%. The average remaining service life of employees is 20 years, and the company will fund at the end of each year an amount equal to service cost plus interest cost for 20X1 and 20X2. December 31, 20X2 20X1 PBO ? ? Benefits paid at 12/31 2,000 0 Fair value of plan assets ? 0 Contributions at 12/31 ? ? Actual return on plan assets 3,200 0 Required: 6-a. Compute the amount of prior service…On January 1, 20X1, Cello Co. established a defined benefit pension plan for its employees. At January 1, 20X1, Cello estimated the service cost for 20X1 to be $45,000. At January 1, 20X2, it estimated 20X2 service cost to be $49,000. On the plan inception date, prior service credit was granted to employees for five years, the period of time between the company’s formation and plan inception. The prior service cost was estimated to be $650,000 at January 1, 20X1. Cello uses a 10% discount rate and assumes a return on plan assets of 9%. The average remaining service life of employees is 20 years, and the company will fund at the end of each year an amount equal to service cost plus interest cost for 20X1 and 20X2. December 31, 20X2 20X1 PBO ? ? Benefits paid at 12/31 2,000 0 Fair value of plan assets ? 0 Contributions at 12/31 ? ? Actual return on plan assets 3,200 0 Prepare T-accounts for Pension asset (liability),…
- Ridley Corporation is a manufacturing company in the Caribbean. The companysponsors a defined benefit pension plan for its employees. The following balances relate to the plan on January 1, 2020. (amounts in thousands).Defined benefit obligation $340,000Plan assets (market-related value) $270,000Pension asset/liability $ 70,000 CrOCI—Loss $ 39,000On December 31, 2020, the actuary provided the following additional data as a result of the operation of the plan during the year. Actual return on plan assets $27,000Service cost $45,000Benefits paid retirees $41,000Contributions $65,000Discount (interest) rate 7%Instructions.(a) Prepare a 2020 pension worksheet with supplementary schedules. (b) Determine the amounts of the components of pension expense that should be recognized by the company in 2020. (c) Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2020.Ridley Corporation is a manufacturing company in the Caribbean. The companysponsors a defined benefit pension plan for its employees. The following balances relate to the plan on January 1, 2020. (amounts in thousands).Defined benefit obligation $340,000Plan assets (market-related value) $270,000Pension asset/liability $ 70,000 CrOCI—Loss $ 39,000On December 31, 2020, the actuary provided the following additional data as a result of the operation of the plan during the year. Actual return on plan assets $27,000Service cost $45,000Benefits paid retirees $41,000Contributions $65,000Discount (interest) rate 7%Instructions.(a) Prepare a 2020 pension worksheet with supplementary schedules. (b) Determine the amounts of the components of pension expense that should be recognized by the company in 2020. (c) Indicate the pension-related amounts that would be reported on the income statement and the statement of financial position for Ridley Corporation for the year 2020.Lewis Industries adopted a defined benefit pension plan on January 1, 2021. By making the provisions of the plan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost was funded immediately by a $2 million cash payment to the fund trustee on January 2, 2021. However, the cost is to be amortized (expensed) over 10 years. The service cost—$250,000 for 2021—is fully funded at the end of each year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actual rate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retired during 2021.Required:Determine each of the following amounts as of December 31, 2021, the fiscal year-end for Lewis:1. Projected benefit obligation.2. Plan assets.3. Pension expense.