Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2019.
Plan assets..................................................$200,000
Defined postretirement benefit obligation...............200,000
As a result of the plan's operation during 2019, the following additional data are provided by the actuary.
Service cost for 2019 is $70,000
Discount (interest) rate is 10%
Contributions to plan in 2019 are $65,000
Actual return on plan assets is $15,000
Benefits paid to employees are $44,000
Instructions
a. Using the preceding data, compute the net periodic postretirement benefit cost for 2019 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.)
b. Prepare any journal entries related to the postretirement plan for 2019 and indicate the postretirement amounts reported in the financial statements for 2019.