Accounting Problem (Simple)

Instructions

Refer to Background Information to com plete Question 3 Part 1.png and Question 3 Part 2.png

Background Information

PharoahLimited sponsors a defined benefit pension plan for its employees, which it accounts for under ASPE. The following data relate to the operation of the plan for the year 2020:

1.The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $55,350.

2.The company's funding policy requires a contribution to the pension trustee of $145,850for 2020.

3.As at January 1, 2020, the company had a defined benefit obligation for accounting purposes of $907,000. The fair value of pension plan assets was $650,000at the beginning of the year. The actual return on plan assets was $43,000, and the discount rate was7%.

4.No benefits were paid in 2020.

Question 3 Part 1.png

Determine the pension expense that should be recognized by the company in 2020. Pension expense $ Prepare the journal entries to record pension expense and the employer's payment to the pension trustee in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Year Account Titles and Explanation Debit Credit 2020 Pension Expense Net Defined Benefit Liability/Asset (To record pension expense.) 2020 Net Defined Benefit Liability/Asset Cash (To record contribution to the pension fund.)Determine the plan's surplus or deficit position and the balance of the Net Defined Benefit Liability/Asset account at January 1, 2020, and at December 31, 2020. Plan's deficit Balance of net defined benefit Liability at January 1, 2020 Balance of net defined benefit Liability v at December 31, 2020 LA Prepare the required disclosures for the 2020 financial statements. Pharoah Limited (Partial) Income Statement 2020 Pension Expense Pharoah Limited (Partial) Balance Sheet 2020 Long-term Liabilities Net Defined Benefit Liability