EBK ADVANCED ACCOUNTING
12th Edition
ISBN: 9780100557567
Author: Cheng
Publisher: YUZU
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Chapter 16, Problem 16.14P
To determine
Employee Trust Fund:
An employee trust fund is a form of a long term saving plan established as a job benefit. Both the employer and the employee may contribute to an employee trust fund. The best-known forms of employee trust fund are the stock ownership plan and the pension plan.
: Preparation of statement of plan net position and a statement of changes in plan net position of the Employees Retirement System Fund for the year ended June 30, 2018
Expert Solution & Answer
Answer to Problem 16.14P
Net Assets held in trust for pension benefits are equal to $540,000 and Net increase from the statement of changes in Plan Net Assets is equal to $76,000.
Explanation of Solution
Preparation of a statement of plan net assets of the Employees Retirement System Fund for the city B’s as shown below:
| City B’s Employees Retirement System FundStatement of plan net assetsAs on June 30, 2018 | ||
| Assets | Amount ($) | Amount ($) |
| Cash and short-term investments | 38,000 | |
| Receivables: | ||
| Due from the city | 4,000 | |
| Interest receivable | 5,000 | |
| Total Receivables | 9,000 | |
| Investment, at fair value | 497,000 | |
| Total Assets | 544,000 | |
| Liabilities | Amount ($) | Amount ($) |
| Refunds payable (Due to resigned employees) | 1,000 | |
| Annuities payable | 3,000 | |
| Total Liabilities | 4,000 | |
| Net Assets held in trust for pension benefits | 540,000 | |
Preparation of a statement of changes in plan net assets of the Employees Retirement System Fund for the city B’s as shown below:
| City B’s Employees Retirement System FundStatement of changes in plan net assetsAs on June 30, 2018 | ||
| Particulars | Amount ($) | Amount ($) |
| Additions | ||
| Contributions: | ||
| Employer (Note:1) | 20,000 | |
| Plan members (Note:2) | 32,000 | |
| Total Contributions | 52,000 | |
| Investment Income: | ||
| Net appreciation ( | 13,500 | |
| Investment earnings received | 30,000 | |
| Accrued earnings at year-end | 5,000 | |
| Net Investment Income | 48,500 | |
| Total additions | 100,500 | |
| Deductions: | ||
| Annuities paid during the year | 13,000 | |
| Annuities payable at year-end | 3,000 | |
| Refund made during the year | 2,500 | |
| Due to resigned employees at year-end | 1,000 | |
| Administrative expenses | 5,000 | |
| Total Deductions | 24,500 | |
| Net Increase (Net Investment Income-Total Deductions) | 76,000 | |
| Net assets held in trust for pension benefits: | ||
| Beginning of the year (July 1, 2017) | 464,000 | |
| End of the year (July 1, 2018) | 5,40,000 | |
Notes:
- Contribution from Employer = Amount received from employer + Amount due from the city At year end
- Amounts received from employees are considered as plan members.
= $16,000 + $4,000
= $20,000
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Chapter 16 Solutions
EBK ADVANCED ACCOUNTING
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