2. Big City provides a defined benefit pension plan for employees of the city water department,an enterprise fund. Assume that the service cost component is $420,000, and interest on thepension liability is $380,000 for the year. Actual returns on plan assets for the year were$300,000 while the projected level of earnings on plan investments was $360,000. Thisdifference is to be amortized over a 5 year period, beginning this year. Finally assume theCity is amortizing a deferred inflow resulting from a change in plan assumptions from a prioryear in the amount of $10,000 per year.Required: Prepare journal entries to record annual pension expense for the enterprise fund. ACC 4310 Governmental and Non-Profit AccountingFinal ExaminationProblem #1GovernmentalBusiness-typeFunctions/ProgramsExpensesCharges for services Operating grantsactivitiesactivitiesTotalGovernmental activities:Total governmental activitiesBusiness-type activities:Total business-type activitiesTotalGeneral revenues:Property taxesSales taxesInvestment earnings425,000425,000Special item -- gain on sale of land(200,000)225,000Transfers(200,000)Total general revenues, special items, and transfers225,000Change in net position225,000225,000Net position, beginning of yearNet position, end of year225,000 $225,000%24

ANSWER : Journal entries of the enterprise

Answered: Prepare journal entries to record…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2. Big City provides a defined benefit pension plan for employees of the city water department,
an enterprise fund. Assume that the service cost component is $420,000, and interest on the
pension liability is $380,000 for the year. Actual returns on plan assets for the year were
$300,000 while the projected level of earnings on plan investments was $360,000. This
difference is to be amortized over a 5 year period, beginning this year. Finally assume the
City is amortizing a deferred inflow resulting from a change in plan assumptions from a prior
year in the amount of $10,000 per year.

Required: Prepare journal entries to record annual pension expense for the enterprise fund.

ACC 4310 Governmental and Non-Profit Accounting
Final Examination
Problem #1
Governmental
Business-type
Functions/Programs
Expenses
Charges for services Operating grants
activities
activities
Total
Governmental activities:
Total governmental activities
Business-type activities:
Total business-type activities
Total
General revenues:
Property taxes
Sales taxes
Investment earnings
425,000
425,000
Special item -- gain on sale of land
(200,000)
225,000
Transfers
(200,000)
Total general revenues, special items, and transfers
225,000
Change in net position
225,000
225,000
Net position, beginning of year
Net position, end of year
225,000 $
225,000
%24

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