Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2020. Plan assets $200,000 Expected postretirement benefit obligation 820,000 Accumulated postretirement benefit obligation 200,000 No prior service costs or OCI balances exist. As a result of the plan's operation during 2020, the following additional data are provided by the actuary. Service cost is $70,000 Discount rate is 10% Contributions to plan are $65,000 Expected return on plan assets is $10,000 Actual return on plan assets is $15,000 Benefits paid to employees are $44,000 Average remaining service to full eligibility: 20 years Instructions Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts. (Assume that contributions and benefits are paid at the end of the year.) Prepare any journal entries related to the postretirement plan for 2020 and indicate the postretirement amounts reported in the financial statements for 2020.

Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2020. Plan assets $200,000 Expected postretirement benefit obligation 820,000 Accumulated postretirement benefit obligation 200,000 No prior service costs or OCI balances exist. As a result of the plan's operation during 2020, the following additional data are provided by the actuary. Service cost is $70,000 Discount rate is 10% Contributions to plan are $65,000 Expected return on plan assets is $10,000 Actual return on plan assets is $15,000 Benefits paid to employees are $44,000 Average remaining service to full eligibility: 20 years Instructions Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts. (Assume that contributions and benefits are paid at the end of the year.) Prepare any journal entries related to the postretirement plan for 2020 and indicate the postretirement amounts reported in the financial statements for 2020.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 35P

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Instructions

Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts. (Assume that contributions and benefits are paid at the end of the year.)
Prepare any journal entries related to the postretirement plan for 2020 and indicate the postretirement amounts reported in the financial statements for 2020.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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Plan assets		$200,000
Expected postretirement benefit obligation	820,000
Accumulated postretirement benefit obligation	200,000
No prior service costs or OCI balances exist.