Question

Amherst City provides a defined benefit pension plan for employees of the city electric utility, an enterprise fund. Assume that the projected level of earnings on plan investments is $184,300, the service cost component is $245,000, and interest on the pension liability is $166,400 for the year. The City is amortizing a deferred outflow resulting from a change in plan assumptions from a prior year in the amount of $6,100 per year. Prepare journal entries to record annual pension expense for the enterprise fund.

Answer 1

Answer:

Dr Service cost 245,000

Cr Interest 166,400

Cr Cash 411,400

Dr Plan assets - pension 411,400

Cr Service cost 245,000

Cr Interest 166,400

Explanation:

Preparation of the journal entries to record annual pension expense for the enterprise fund of Amherst City

Since we are Assuming that the plan investments was $184,300 while the service cost component is the sum of $245,000, and interest on the pension liability is the sum of $166,400 for the year this means the Journal entries to record annual pension expense for the enterprise fund of Amherst City will be:

Dr Service cost 245,000

Cr Interest 166,400

Cr Cash 411,400

(245,000+166,400)

Dr Plan assets - pension 411,400

(245,000+166,400)

Cr Service cost 245,000

Cr Interest 166,400