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    Income Tax Payable, Pension Expense, Return on Plan Assets..

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    In 2012, Amirante Corporation had pretax financial income of $240,200 and taxable income of $191,600. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 40%. Compute the amount to be reported as income taxes payable at December 31, 2012.


    At December 31, 2012, Fell Corporation had a deferred tax liability of $725,628, resulting from future taxable amounts of $2,134,200 and an enacted tax rate of 34%. In May 2013, a new income tax act is signed into law that raises the tax rate to 39% for 2013 and future years. Prepare the journal entry for Fell to adjust the deferred tax liability.
    Description/Account Debit Credit

    AMR Corporation (parent company of American Airlines) reported the following for 2009 (in millions).

    Service cost $396
    Interest cost on P.B.O 738
    Return on plan assets 786
    Amortization of service cost 25
    Amortization of loss 29
    Compute AMR Corporation's 2009 pension expense (in millions).

    $ ___________________________million

    For Warren Corporation, year-end plan assets were $2,166,400. At the beginning of the year, plan assets were $1,690,600. During the year, contributions to the pension fund were $120,000, and benefits paid were $200,000. Compute Warren's actual return on plan assets.


    For 2010, Campbell Soup Company had pension expense of $42 million and contributed $271 million to the pension fund. Prepare Campbell Soup Company's journal entry to record pension expense and funding.

    Description/Account Debit Credit

    Lahey Corp. has three defined-benefit pension plans as follows.

    Pension Assets Projected Benefit
    (at Fair Value ) Obligation

    Plan X $642,100 $536,300
    Plan Y 914,300 760,100
    Plan Z 580,800 748,900

    How will Lahey report these multiple plans in its financial statements?

    Pension Asset $_____________________________
    Pension Liability $__________________________

    For 2012, Sampsell Inc. computed its annual postretirement expense as $243,640. Sampsell's contribution to the plan during 2012 was $191,580. Prepare Sampsell's 2012 entry to record postretirement expense. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

    Description/Account Debit Credit

    Manno Corporation has the following information available concerning its postretirement benefit plan for 2012.

    Service cost $57,490
    Interest cost 61,670
    Actual return on plan assets 36,220

    Compute Manno's 2012 postretirement expense.


    Ravonette Corporation issued 310 shares of $13 par value common stock and 150 shares of $46 par value preferred stock for a lump sum of $17,600. The common stock has a market price of $22 per share, and the preferred stock has a market price of $95 per share. Prepare the journal entry to record the issuance. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round answers to zero decimal places, e.g. 16,210.)
    Description/Account Debit Credit

    Garfield Company purchased, as a held-to-maturity investment, $83,800 of the 9%, 9-year bonds of Chester Corporation for $74,520, which provides an 11% return. Prepare Garfield's journal entries for (a) the purchase of the investment and (b) the receipt of annual interest and discount amortization. Assume effective interest amortization is used. (Round answers to zero decimal places, e.g. 25,000. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

    Description/Account Debit Credit


    Clydesdale Corporation has a cumulative temporary difference related to depreciation of $616,400 at December 31, 2012. This difference will reverse as follows: 2013, $46,400; 2014, $259,200; and 2015, $310,800. Enacted tax rates are 34% for 2013 and 2014, and 40% for 2015. Compute the amount Clydesdale should report as a deferred tax liability at December 31, 2012.

    Problem 20-4
    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 $936,660 $1,137,660
    Projected benefit obligation, January 1 938,000 1,072,000
    Pension asset/liability, January 1 187,600 Cr. ?
    Prior service cost, January 1 335,000 321,600
    Service cost 80,400 120,600
    Actual and expected return on plan assets 32,160 40,200
    Amortization of prior service cost 13,400 16,080
    Contributions (funding) 154,100 160,800
    Accumulated benefit obligation, December 31 670,000 737,000
    Interest/settlement rate 8 % 8%

    Compute pension expense for 2012 and 2013.

    Pension expense for 2012:
    Pension expense for 2013:

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