Yuri Co. operates a chain of gift shops. The company maintains a defined contrib

Question

Yuri Co. operates a chain of gift shops. The company maintains a defined contribution pension plan for its employees. The plan requires quarterly installments to be paid to the funding agent, Whims Funds, by the fifteenth of the month following the end of each quarter. Assume that the pension cost is $400,000 for the quarter ended December 31.

Required: A. Journalize the entries to record the accrued pension liability on December 31, 2015 (on page 11 of the journal) and the payment to the funding agent on January 15, 2016 (on page 12 of the journal). Refer to the Chart of Accounts for exact wording of account titles. Be sure to include the year when entering the date in the journal. B. How does a defined contribution plan differ from a defined benefit plan? ASSETS REVENUE 410 Sales 110 Cash 111 Accounts Recelvable 112 Interest Receivable 610 Interest Revenue 113 Notes Receivable EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 524 Depreciation Expense-Building 525 Delivery Expense 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Supplies Expense 535 Payroll Tax Expense 536 Vacation Pay Expense 537 Pension Expense 538 Cash Short and Over 539 Product Warranty Expense 540 Miscelianeous Expense 710 Interest Expense 115 Merchandise Inventory 116 Supplies 118 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment Equipment LIABILITIES 210 Accounts Payable 213 Interest Payable 214 Notes Payable 215 Salaries Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Federal income Tax Payable 219 Employees State Income Tax Payable 221 Retirement Savings Deductions Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 226 Vacation Pay Payable 227 Unfunded Pension Liability 228 Product Warranty Payable

Explanation / Answer

a JOURNAL Date Description Post. Ref. Debit Credit Dec. 31 Pension Expense $        400,000 Unfunded Pension Liability $        400,000 To record quarterly pension cost. Jan. 15 Unfunded Pension Liability $        400,000 Cash $        400,000 b In a defined contribution plan, the company invests contributions on behalf of the employee during the employee’s working years. Normally, the employee and employer contribute to the plan. The employee’s pension depends on the total contributions and the investment return on those contributions. In a defined benefit plan, the company pays the employee a fixed annual mount based on a formula. The employer is obligated to pay for (fund) the employee’s future pension benefits. Note: For any further help, please ask in comment, Thanks

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.