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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Crabtree Company’s pension expense for the current year is $200,000, and the company funds $185,000. Prepare the journal entry Crabtree will make on December 31.

To determine

Prepare journal entry to record the pension expense of Company C as of December 31.

Explanation

Pension plan: Pension plan is the plan devised by corporations to pay the employees an income after their retirement, in the form of pension.

Prepare journal entry to record the pension expense of Company C as of December 31as follows:

In this case, Company C has understated (funded) the pension contribution by $15,000($200,000$185,000), hence credit the accrued/prepaid pension cost account by $15,000.

DateAccounts Title and ExplanationPost Ref

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