Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2020. Plan assets $200,000 Expected postretirement benefit obligation 820,000 Accumulated postretirement benefit obligation 200,000 No prior service costs or OCI balances exist. As a result of the plan's operation during 2020, the following additional data are provided by the actuary. Service cost is $70,000 Discount rate is 10% Contributions to plan are $65,000 Expected return on plan assets is $10,000 Actual return on plan assets is $15,000 Benefits paid to employees are $44,000 Average remaining service to full eligibility: 20 years Instructions Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts. (Assume that contributions and benefits are paid at the end of the year.) Prepare any journal entries related to the postretirement plan for 2020 and indicate the postretirement amounts reported in the financial statements for 2020.
Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2020. Plan assets $200,000 Expected postretirement benefit obligation 820,000 Accumulated postretirement benefit obligation 200,000 No prior service costs or OCI balances exist. As a result of the plan's operation during 2020, the following additional data are provided by the actuary. Service cost is $70,000 Discount rate is 10% Contributions to plan are $65,000 Expected return on plan assets is $10,000 Actual return on plan assets is $15,000 Benefits paid to employees are $44,000 Average remaining service to full eligibility: 20 years Instructions Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts. (Assume that contributions and benefits are paid at the end of the year.) Prepare any journal entries related to the postretirement plan for 2020 and indicate the postretirement amounts reported in the financial statements for 2020.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter19: Accounting For Post Retirement Benefits
Section: Chapter Questions
Problem 6E
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Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2020.
| Plan assets | $200,000 | |
| Expected postretirement benefit obligation | 820,000 | |
| Accumulated postretirement benefit obligation | 200,000 | |
| No prior service costs or OCI balances exist. |
As a result of the plan's operation during 2020, the following additional data are provided by the actuary.
| Service cost is $70,000 |
| Discount rate is 10% |
| Contributions to plan are $65,000 |
| Expected return on plan assets is $10,000 |
| Actual return on plan assets is $15,000 |
| Benefits paid to employees are $44,000 |
| Average remaining service to full eligibility: 20 years |
Instructions
- Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the
journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts. (Assume that contributions and benefits are paid at the end of the year.) - Prepare any journal entries related to the postretirement plan for 2020 and indicate the postretirement amounts reported in the financial statements for 2020.
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