(1)
Pension plan: This is the plan devised by corporations to pay the employees an income after their retirement, in the form of pension.
Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.
Pension expense includes the following components:
- Service cost
- Interest cost
- Expected return on plan assets
- Amortization of prior service cost
- Amortization of net loss or net gain
To reconcile: The beginning balance of Net Loss–OCI account with ending balance of Net Loss–OCI account related to pension plan
(2)
The average service life of employees from the amortization of net loss or gain formula
(3)
Other postretirement benefits: The postretirement benefits which are provided by employers, other than pensions, like medical insurance, life insurance, and legal services, and healthcare benefits, are referred to as other postretirement benefits.
To reconcile: The beginning balance of Net Gain–OCI account with ending balance of Net Gain–OCI account related to other postretirement benefit plan
(4)
Net income, if Incorporation M had assumed 1% of lower health care trend for the year 2015, and the tax rate is 35%
Want to see the full answer?
Check out a sample textbook solutionChapter 17 Solutions
CONNECT F/ INTERMEDIATE ACCTING>I<
- Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year: 101 Salaries Payable 102 Social Security Tax Payable 52,913 103 Medicare Tax Payable 728 104 Employees Federa1 Income Tax Payable 4,490 1 OS Employees State Income Tax Payable 4,073 T C-5 State Unemployment Tax Payable 1,260 107 Federal Unemployment Tax Payable 360 108 Retirement Savings Deductions Payable 2,300 109 Medical Insurance Payable 2,520 201 Sales Salaries Expense 700,000 301 Officers Salaries Expense 340,00O 401 Office Salaries Expense 125,000 408 Payroll Tax Expense 59,491 The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December: Dec. 1. Issued Check No. 815 to Aberderas Insurance Company for 2,520, in payment of the semiannual premium on the group medical insurance policy. 1, Issued Check No. 816 to Alvarez. Bank for 8,131, in payment for 2,913 of social security tax, 728 of Medicare tax, and 4,490 of employees federal income tax due. 2. Issued Check No. 817 for 2,300 to Alvarez Bank to invest in a retirement savings account for employees. 12 Journalized the entry to record the biweekly payroll. A summary of the payroll record follows: 12. Issued Check No. 822 in payment of the net amount of the biweekly payroll to fund tile payroll bank account. 12. Journalized the entry to record payroll taxes on employees' earnings of December 12: social security tax, SI,452; Medicare tax, 363: state unemployment tax, 315: federal unemployment tax. 90. 15. Issued Check No. 830 to Alvarez Bank for 7,938, in payment of 2,904 of social security tax, 726 of Medicare tax, and 4,308 of employees' federal income tax due. 26. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows: Dec. 26. Journalized the entry to record payroll taxes on employees' earnings of December 26: social security tax, SI,455; Medicare tax, 364; state unemployment tax, SI50; federal unemployment tax, S40. 30. Issued Check No. 851 for 6,258 to State Department of Revenue, in payment of employees' state income tax due on December 31. 30. Issued Check No. 852 to Alvarez Bank for 2,300 to invest in a retirement savings account for employees. 31 Paid 55,400 to the employee pension plan. The annual pension cost is 65,500. (Record both the payment and the unfunded pension liability.) Instructions 1. Journalize the transactions. 2. Journalize the following adjusting entries on December 31: a. Salaries accrued: sales salaries, 4,275; officers salaries, 2,175; office salaries, 825. The payroll taxes are immaterial and are not accrued. b. Vacation pay, 13,350.arrow_forwardContingent liabilities Altria Group, Inc., has more than 12 pages dedicated to describing contingent liabilities in the notes to recent financial statements. These pages include extensive descriptions of multiple contingent liabilities. Use the Internet to research Altria Group, Inc., at www.altria.com. a. What are the major business units of Altria Group? b. Based on your understanding of this company, why would Altria Group require more than 12 pages of contingency disclosure?arrow_forwardPayroll accounts and year-end entries The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year: 211 Salaries Payable 212 Social Security Tax Payable 9,273 213 Medicare Tax Payable 2,318 214 Employees Federal Income Tax Payable 15,455 215 Employees State Income Tax Payable 13,909 216 State Unemployment Tax Payable 1,400 217 Federal Unemployment Tax Payable SOO 218 Retirement Savings Deductions Payable 3,400 219 Medical Insurance Payable 27r000 411 Operations Salaries Expense 950.000 S11 Officers Salaries Expense 600,000 SI 2 Office Salaries Expense 150.000 S19 Payroll Tax Expense 137,951 The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December: Dec. 2. Issued Check No. 410 for 53,400 to Jay Bank to invest in a retirement savings account for employees. 2. Issued Check No. 411 to Jay Bank for 527,046, in payment of 59,273 of social security tax, 2,318 of Medicare tax, and 15,455 of employees federal income tax due. 13 Journalized the entry to record the biweekly payroll. A summary of the payroll record follows: Dec. 13. Issued Check No. 420 in payment of the net amount of the biweekly payroll to fund the payroll bank account. 13. Journalized the entry to record payroll taxes on employees' earnings of December 13: social security tax. 4,632; Medicare tax, 1,158; state unemployment tax. 350; federal unemployment tax, 125. 16. Issued Check No. 424 to Jay Bank for 27,020. in payment of 9,264 of social security tax, 2,316 of Medicare tax, and 15,440 of employees' federal income tax due. 19. Issued Check No. 429 to Sims-Walker Insurance Company for 31,500, in payment of the semiannual premium on the group medical insurance policy. 27. Journalized the entry to record the biweekly payroll. A summary of the payroll 27. Issued Check No. 541 in payment of the net amount of the biweekly payroll to fund the payroll bank account. 27. Journalized the entry to record payroll taxes on employees' earnings of December 27: social security tax, 4,668; Medicare tax. 1,167: state unemployment tax, 225; federal unemployment tax, 75. 27. Issued Check No. 543 for 20,884 to State Department of Revenue in payment of employees' state income tax due on December 31. 31. Issued Check No. 545 to Jay Bank for 3400 to invest in a retirement savings account for employees. 31. Paid 45,000 to the employee pension plan. The annual pension cost is 60,000. (Record both the payment and unfunded pension liability.) Instructions 1. Journalize the transactions. 2. Journalize the following adjusting entries on December 31: a. Salaries accrued: operations salaries, 8,560; officers salaries, 5,600: office salaries, 1,400. The payroll taxes are immaterial and are not accrued. b. Vacation pay, 15,000.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningAccounting (Text Only)AccountingISBN:9781285743615Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
- Corporate Financial AccountingAccountingISBN:9781337398169Author:Carl Warren, Jeff JonesPublisher:Cengage Learning