Pension Plan: Pension plan is a fixed retirement benefits that are determined by a specific designated formula. Pension Expense: Pension is a payment provided to the employees at the time of their retirement. It is based on years of service, annual compensation and age. Projected benefit obligation (PBO) : This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels. Plan assets : The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. To Journalize: The transactions to determine the cash paid to pension as reported in the statement of cash flows.

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Chapter 21, Problem 21.28E

To determine

Pension Plan: Pension plan is a fixed retirement benefits that are determined by a specific designated formula.

Pension Expense: Pension is a payment provided to the employees at the time of their retirement. It is based on years of service, annual compensation and age.

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The transactions to determine the cash paid to pension as reported in the statement of cash flows.

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