Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5% x service years x final year's salary,payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $93,000 at the end of 2021 and thecompany's actuary projects her salary to be $295,000 at retirement. The actuary's discount rate is 7%. (FV of $1, PV of $1, FVA of $1,PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:1. What is the company's projected benefit obligation at the beginning of 2021 (after 14 years' service) with respect to Davenport? (Donot round intermediate calculations. Round your final answer to the nearest whole dollar.)2. Estimate by the projected benefits approach the portion of Davenport's annual retirement payments attributable to 2021 service.3. What is the company's service cost for 2021 with respect to Davenport? (Do not round intermediate calculations. Round your finalanswer to the nearest whole dollar.)4. What is the company's interest cost for 2021 with respect to Davenport? (Do not round intermediate calculations. Round your finalanswer to the nearest whole dollar.)5. Combine your answers to requirements 1, 3, and 4 to determine the company's projected benefit obligation at the end of 2021 (after15 years' service) with respect to Davenport. (Do not round intermediate calculations. Round your final answer to the nearest wholedollar.)1. Project benefit obligation2. Annual retirement payments66,3753. Service cost4. Interest cost5. Projected benefit obligation53,426

1 Project benifit obligation 150180 2 Annual retirement payments 66375 3 Service cost 11484 4…

Answered: Sachs Brands's defined benefit pension…

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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Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6%x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $84,000 at the end of 2024 and the company's actuary projects her salary to be $250,000 at retirement. The actuary's discount rate is 6%. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) At the beginning of 2025, the pension formula was amended to: 1.75% * Service years x Final year's salary x The amendment was made retroactive to apply the increased benefits to prior service years. Required: 1. What is the company's prior service cost at the beginning of 2025 with respect to Davenport after the amendment described above? 2. Since the amendment occurred at…
Scott Hobson Enterprises has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75.000; service cost, $14,000; interest cost, $6,000; benefits paid for the year, $9,000; ending PBO, $89,000; and the expected return on plan assets, $10.000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a debit to pension expense for: Multiple Choice $20,000. $12,000. $10,000. $15,000. 17 of 39 Next > Prev Show Question no....pages df Question no....pages MacBook Air ...
A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit pension plan of Universal Products is given below. The actuary's discount rate is 5%. At the end of 2022, the pension formula was amended, creating a prior service cost of $240,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year, as well as, the previous two years. Required: Fill in the missing amounts. Note: Enter your answers in thousands (I.e., 5,500 should be entered as 5.5). Enter credit amounts with a minus sign. ($ in thousands) Balance, January 1, 2024 Service cost Interest cost, 5% Expected retum on assets Adjust for. Loss on assets Amortization: Prior service cost Amortization: Net loss Gain on PBO Prior service cost Cash funding Retiree benefits Balance, December 31, 2024 PBO $ (560.0) (28.0) $ (614.0) Plan Assets S $ Prior Service Net Loss - Cost-AOCr AOCI…
Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The employees will receive their annual payments for as long as they live. Life expectancy for each employee is 15 years beyond retirement. Their names, the amount of their annual pension payments, and the date they will receive their first payment are shown below: Annual Employee Payment Tinkers $ 33,000 Evers Chance 38,000 43,000 Date of First Payment 12/31/2027 12/31/2028 12/31/2029 Required: 1. Compute the present value of the pension obligation to these three employees as of December 31, 2024. Assume a 9% interest rate. 2. The company wants to have enough cash invested at December 31, 2027, to provide for all three employees. To accumulate enough cash, they will make three equal annual contributions to a fund that will earn 9% interest compounded annually. The first contribution will be made on December 31, 2024. Compute the amount of this required annual…
Oregon Company's employees are eligible for retirement with benefits at the end of the year in which both age 60 is attained and they have completed 35 years of service. The benefits provide 15 years' reimbursement for health care services of $39,000 annually, beginning one year from the date of retirement. Ralph Young was hired at the beginning of 1988 by Oregon after turning age 22 and is expected to retire at the end of 2026 (age 60). The discount rate is 4 %. The plan is unfunded. The PV of an ordinary annuity of $1 where n = 15 and i = 4% is 11.11839. The PV of $1 where n = 2 and i = 4% is 0.92456. With respect to Ralph, what is the service cost to be included in Oregon's 2024 postretirement benefit expense, rounded to the nearest dollar? Multiple Choice $6,881 $ 12, 382 $39,000 $10, 280
Many companies offer retirement plans wherein the company matches the contributions made by the employee up to 6% of the employee’s salary. An engineer planning for her retirement expects to invest the maximum of 6% each year. Her salary in year one is $60,000 and is expected to increase by 4% each year. Including the employer’s contributions, how much will she have in her account at the end of 20 years if interest accrues at 7% per year?
A corporation's pension plan provides a lifetime annual income to its employees upon retirement at age 65. The plan provides 4% for each year of service of the employee's salary upon retirement. Those who retire before 65 have their benefit reduced by 1.4% for each year before 65 that they retire. Russ retires at age 60 with 26 years of service. If his salary upon retirement is $50,732, what is his annual pension benefit? Round your answer to the nearest dollar.
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.3% x service years * final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $87,000 at the end of 2024 and the company's actuary projects her salary to be $265,000 at retirement. The actuary's discount rate is 9%. At the beginning of 2025, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 10% is the appropriate rate. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2025 with respect to Davenport. Note: Do not round intermediate calculations. Round your final answer to…
Martin Services Company provides their employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $39,500 for the period. The pension plan requires a contribution to the plan administrator equal to 9% of employee salaries. Salaries were $750,000 during the period. Hide a. Provide the journal entry for the vacation pay. Hide b. Provide the journal entry for the pension benefit.
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.2% x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $95,000 at the end of 2024 and the company's actuary projects her salary to be $305,000 at retirement. The actuary's discount rate is 9%. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) At the beginning of 2025, the pension formula was amended to: 1.40% * Service years * Final year's salary The amendment was made retroactive to apply the increased benefits to prior service years. Required: 1. What is the company's prior service cost at the beginning of 2025 with respect to Davenport after the amendment described above? 2. Since the amendment occurred at…
Oregon Co.'s employees are eligible for retirement with benefits at the end of the year in which both age 60 is attained and they have completed 35 years of service. The benefits provide 15 years’ reimbursement for health care services of $27,000 annually, beginning one year from the date of retirement. Ralph Young was hired at the beginning of 1992 by Oregon after turning age 22 and is expected to retire at the end of 2030 (age 60). The discount rate is 3%. The plan is unfunded.The PV of an ordinary annuity of $1 where n = 15 and i = 3% is 11.93794.The PV of $1 where n = 2 and i = 3% is 0.94260. With respect to Ralph, what is the interest cost to be included in Oregon's 2029 postretirement benefit expense, rounded to the nearest dollar?
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Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5% x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of