AMNESTY PARDON Co. has a post-employment benefits plan that is considered as defined contribution plan. According to the plan, AMNESTY agrees to contribute P800,000 annually to a retirement fund for the benefit of its employees. On December 31, 20x1, because of poor results of operations and insufficient working capital, AMNESTY was only able to contribute P320,000 to the fund. On December 31, 20x2, because of a profitable year, AMNESTY decided to contribute P1,800,000 to the retirement fund. On January 12, 20x3, an employee retired and was eligible to a P60,000 retirement benefits based on the operating efficiency and investment earnings of the fund. Compute for the retirement benefits expense to be recognized in 20x3. Prepare the journal entry.
AMNESTY PARDON Co. has a post-employment benefits plan that is considered as defined contribution plan. According to the plan, AMNESTY agrees to contribute P800,000 annually to a retirement fund for the benefit of its employees. On December 31, 20x1, because of poor results of operations and insufficient working capital, AMNESTY was only able to contribute P320,000 to the fund. On December 31, 20x2, because of a profitable year, AMNESTY decided to contribute P1,800,000 to the retirement fund. On January 12, 20x3, an employee retired and was eligible to a P60,000 retirement benefits based on the operating efficiency and investment earnings of the fund. Compute for the retirement benefits expense to be recognized in 20x3. Prepare the journal entry.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:AMNESTY PARDON Co. has a post-employment benefits plan that is considered as defined contribution
plan. According to the plan, AMNESTY agrees to contribute P800,000 annually to a retirement fund for the
benefit of its employees.
On December 31, 20x1, because of poor results of operations and insufficient working capital, AMNESTY
was only able to contribute P320,000 to the fund. On December 31, 20x2, because of a profitable year,
AMNESTY decided to contribute P1,800,000 to the retirement fund. On January 12, 20x3, an employee
retired and was eligible to a P60,000 retirement benefits based on the operating efficiency and investment
earnings of the fund.
Compute for the retirement benefits expense to be recognized in 20x3. Prepare the journal entry.
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