Acc423 Intermediate Accounting: Week 5 Individual Assignment (P20-4a, E20-7, E22-19, P22-6a,b)

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Acc423 Intermediate Accounting                                             
Week 5 Individual Assignment (P20-4a, E20-7, E22-19, P22-6)                                 
                                               
P20-4(a) Pension Expense, Journal Entries for 2 Years                                   
Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2012 and 2013.                                        
                 2012       2013     
Plan assets (fair value), December 31     1,538,499             1,868,649           
Projected benefit obligation, January 1  1,540,700             1,760,800           
Pension asset/liability, January 1                308,140 Cr.          ?            
Prior service cost, January 1         550,250                 528,240               
Service cost         132,060                 198,090               
Actual and expected return on plan assets            52,824  66,030
Amortization of prior service cost              22,010  26,412
Contributions (funding)                 253,115                 264,120               
Accumulated benefit obligation, December 31    1,100,500             1,210,550           
Interest/settlement rate              9%          9%         
                                               
Instructions                                       
(a)    Compute pension expense for 2012 and 2013.                                  
 
E20-7  Basic Pension Worksheet                                                              
The following defined pension data of Rydell Corp. apply to the year 2012.                                                          
Projected benefit obligation, 1/1/12 (before amendment)            565,200                                               
Plan assets, 1/1/12          546,800                                               
Pension liability                  18,400                                 
On January 1, 2012, Rydell Corp., through plan amendment, grants prior service benefits having a present value of 122,000                                                                
Settlement rate                10%                                       
Service cost         63,900                                 
Contributions (funding)                 68,900                                 
Actual (expected) return on plan assets                 52,900                                 
Benefits paid to retirees                42,300                                 
Prior service cost amortization for 2012  24,000                                 
                                                               
 Instructions                                                      
 For 2012, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.                       
E22-19 Error Analysis and Correcting Entries                                                      
A partial trial balance of Dickinson Corporation is as follows on December 31, 2012.          
                 Dr.          Cr.                        
Supplies on hand              2,429                                   
Accrued salaries and wages                          1,882                   
Interest receivable           5,290                                   
Prepaid insurance             87,970                                 
Unearned rent                   -                            
Accrued interest payable                             12,500                 
                                                               
Additional adjusting data:                                                           
1. A physical count of supplies on hand on December 31, 2012, totaled $1,260.                                                   
2. Through oversight, the Accrued Salaries and Wages account was not changed during 2012. Accrued salaries and wages on December 31, 2012, amounted to $4,315.     3. The Interest Receivable account was also left unchanged during 2012. Accrued interest on investments amounts to $4,470 on December 31, 2012.                                     4. The unexpired portions of the insurance policies totaled $64,800 as of December 31, 2012.
5. $21,770 was received on January 1, 2012 for the rent of a building for both 2012 and 2013. The entire amount was credited to rental income.   
6. Depreciation for the year was erroneously recorded as $5,369 rather than the correct figure of $53,690.                                                          
7. A further review of depreciation calculations of prior years revealed that depreciation of $7,472 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.   
                                                               
Instructions                                                       
(a) Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2012? (Ignore income tax considerations.)     
(b) Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2012? (Ignore income tax considerations.)   
 
P22-6 Accounting Change and Error Analysis                                
On December 31, 2012, before the books were closed, the management and accountants of Madrasa Inc. made the following determinations about three depreciable assets.                                           
1. Depreciable asset A was purchased January 2, 2009. It originally cost $420,000 and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2012, the decision was made to change the depreciation method from straight-line to sum-of-the-years' digits, and the estimates relating to useful life and salvage value remained unchanged.                                
2. Depreciable asset B was purchased January 3, 2008. It originally cost $252,000 and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for 15 years and have a zero salvage value. In 2012, the decision was made to shorten the total life of this asset to 9 years and to estimate the salvage value at $3,200.                                               
3. Depreciable asset C was purchased January 5, 2008. The asset's original cost was $146,800, and this amount was entirely expensed in 2008. This particular asset has a 10-year useful life and no salvage value. The straight-line method was chosen for depreciation purposes.                                         
Additional data:                                               
1. Income in 2012 before depreciation expense amounted to $480,000.                                
2. Depreciation expense on assets other than A, B, and C totaled $55,100 in 2012.                                            
3. Income in 2011 was reported at $380,000.                                       
4. Ignore all income tax effects.                                
5. 129,400 shares of common stock were outstanding in 2011 and 2012.                                                
                                               
Instructions:                                      
(a) Prepare all necessary entries in 2012 to record these determinations.                                             
(b) Prepare comparative retained earnings statement for Madrasa Inc. for 2011 and 2012.  The company had retained earnings of $229,000 at December 31, 2010.
 
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