Required:Determine Scholz's pension expense for 2019 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets and payment of benefits to retirees.Determine the new gains and/or losses in 2019 and prepare the appropriate journal entry(s) to record them.Prepare a pension spreadsheet to assist you in determining end of 2019 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability.Required:4. Determine Scholz's pension expense for 2020 and prepare the appropriate journal entries to record the expense, the cash funding of plan assets, and payment of benefits to retirees.5. Determine the new gains and/or losses in 2020 and prepare the appropriate journal entry(s) to record them.6. Prepare a pension spreadsheet to assist you in determining end of 2020 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability. **Analysis of Changes in PBO and Plan Assets for Scholz Nursing Home during 2020**This table outlines the changes in the Projected Benefit Obligation (PBO) and plan assets for Scholz Nursing Home over the course of 2020.### PBO (Projected Benefit Obligation)- **Beginning of 2020:** $350 million- **Service Cost:** $38 million- **Interest Cost (8%):** $28 million- **Loss (Gain) on PBO:** $5 million- **Less: Retiree Benefits:** ($16 million)- **End of 2020:** $405 million### Plan Assets- **Beginning of 2020:** $240 million- **Return on Plan Assets (7.5%, 10% expected):** $36 million- **Cash Contributions:** $30 million- **Less: Retiree Benefits:** ($16 million)- **End of 2020:** $290 millionThis detailed financial data indicates the monetary movements and changes in the nursing home's obligations and assets throughout the specified period. ### Changes in the PBO and Plan Assets of Scholz Nursing Home during 2019The following details summarize significant changes and financial metrics related to the Projected Benefit Obligation (PBO) and plan assets for Scholz Nursing Home.#### Key Financial Figures1. **Prior Service Cost:** - $32 million from a plan amendment at the beginning of 2017. - Amortization considered: $4 million per year.2. **Net Loss-Pensions:** - $40 million as of 1/1/19, indicating previous losses exceeded previous gains.3. **Average Remaining Service Life:** - The active employee group has an average service life of 10 years.4. **Actuary's Discount Rate:** - Set at 8%.#### Detailed Financial Breakdown (in millions)- **PBO Changes:** - **Beginning of 2019:** $300 - **Service Cost:** $48 - **Interest Cost (8%):** $24 - **(Gain) on PBO:** $(2) - **Less: Retiree Benefits:** $(20) - **End of 2019:** $350- **Plan Assets Changes:** - **Beginning of 2019:** $200 - **Return on Plan Assets at 7.5% (10% expected):** $15 - **Cash Contributions:** $45 - **Less: Retiree Benefits:** $(20) - **End of 2019:** $240This data provides a comprehensive look at the movement in pension obligations and plan assets over the year. Understanding these changes is crucial for financial planning and ensuring the stability of pension plans. The PBO increased due to accrued service and interest costs, while plan assets grew through contributions and some investment returns, despite falling short of expected levels.

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Answered: Required: Determine Scholz's…

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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Required:

Determine Scholz's pension expense for 2019 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets and payment of benefits to retirees.
Determine the new gains and/or losses in 2019 and prepare the appropriate journal entry(s) to record them.
Prepare a pension spreadsheet to assist you in determining end of 2019 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability.

Required:

4. Determine Scholz's pension expense for 2020 and prepare the appropriate journal entries to record the expense, the cash funding of plan assets, and payment of benefits to retirees.

5. Determine the new gains and/or losses in 2020 and prepare the appropriate journal entry(s) to record them.

6. Prepare a pension spreadsheet to assist you in determining end of 2020 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability.

**Analysis of Changes in PBO and Plan Assets for Scholz Nursing Home during 2020**

This table outlines the changes in the Projected Benefit Obligation (PBO) and plan assets for Scholz Nursing Home over the course of 2020.

### PBO (Projected Benefit Obligation)
- **Beginning of 2020:** $350 million
- **Service Cost:** $38 million
- **Interest Cost (8%):** $28 million
- **Loss (Gain) on PBO:** $5 million
- **Less: Retiree Benefits:** ($16 million)
- **End of 2020:** $405 million

### Plan Assets
- **Beginning of 2020:** $240 million
- **Return on Plan Assets (7.5%, 10% expected):** $36 million
- **Cash Contributions:** $30 million
- **Less: Retiree Benefits:** ($16 million)
- **End of 2020:** $290 million

This detailed financial data indicates the monetary movements and changes in the nursing home's obligations and assets throughout the specified period.

### Changes in the PBO and Plan Assets of Scholz Nursing Home during 2019

The following details summarize significant changes and financial metrics related to the Projected Benefit Obligation (PBO) and plan assets for Scholz Nursing Home.

#### Key Financial Figures
1. **Prior Service Cost:**
- $32 million from a plan amendment at the beginning of 2017.
- Amortization considered: $4 million per year.

2. **Net Loss-Pensions:**
- $40 million as of 1/1/19, indicating previous losses exceeded previous gains.

3. **Average Remaining Service Life:**
- The active employee group has an average service life of 10 years.

4. **Actuary's Discount Rate:**
- Set at 8%.

#### Detailed Financial Breakdown (in millions)
- **PBO Changes:**
- **Beginning of 2019:** $300
- **Service Cost:** $48
- **Interest Cost (8%):** $24
- **(Gain) on PBO:** $(2)
- **Less: Retiree Benefits:** $(20)
- **End of 2019:** $350

- **Plan Assets Changes:**
- **Beginning of 2019:** $200
- **Return on Plan Assets at 7.5% (10% expected):** $15
- **Cash Contributions:** $45
- **Less: Retiree Benefits:** $(20)
- **End of 2019:** $240

This data provides a comprehensive look at the movement in pension obligations and plan assets over the year. Understanding these changes is crucial for financial planning and ensuring the stability of pension plans. The PBO increased due to accrued service and interest costs, while plan assets grew through contributions and some investment returns, despite falling short of expected levels.

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