On January 1, 2016, Flash and Dash Company adopted a healthcareplan for its retired employees. To determine eligibility forbenefits, the company retroactively gives credit to the date ofhire for each employee. The following information is availableabout the plan:
| Service cost | $30,650 |
| Accumulated postretirement benefit obligation (1/1/16) | 159,600 |
| Expected return on plan assets | 0 |
| Amortization of Prior service cost | 11,400 |
| Payments to retired employees during 2016 | 4,800 |
| Interest rate | 8% |
| Average remaining service period of active plan participants(1/1/16) | 14 years |
Required:
| 1. | Compute the OPRB expense for 2016 if the company uses theaverage remaining service life to amortize the prior servicecost. |
| 2. | Prepare all the required journal entries for 2016 if the plan isnot funded. |
Prepare the entries to record:
| 1. | the prior service cost on January 1. |
| 2. | the postretirement benefit expense for 2016 on December31. |
| 3. | the payments to retired employees during 2016 on December31. |
| 4. | the amortization of prior service cost on December 31. |
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GENERAL JOURNAL
| DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT |
|---|
1 | | | | | |
2 | | | | | |
3 | | | | | |
4 | | | | | |
5 | | | | | |
6 | | | | | |
7 | | | | | |
8 | | | | | |
Analysis
Compute the OPRB expense for 2016 if the company uses theaverage remaining service life to amortize the prior servicecost.
OPRB expense: _______________
