The document discusses retirement plan contributions and expenses for two companies, Lanayru and Wisdom, in 2018 and 2019. For Lanayru, contributions were 5% of annual salaries of $4 million in 2018 and $4.2 million in 2019. For Wisdom, benefit expenses exceeded contributions by $150,000 in 2018 and $50,000 in 2019, resulting in accrued benefit costs on the balance sheet of $150,000 and $100,000 respectively.
The document discusses retirement plan contributions and expenses for two companies, Lanayru and Wisdom, in 2018 and 2019. For Lanayru, contributions were 5% of annual salaries of $4 million in 2018 and $4.2 million in 2019. For Wisdom, benefit expenses exceeded contributions by $150,000 in 2018 and $50,000 in 2019, resulting in accrued benefit costs on the balance sheet of $150,000 and $100,000 respectively.
The document discusses retirement plan contributions and expenses for two companies, Lanayru and Wisdom, in 2018 and 2019. For Lanayru, contributions were 5% of annual salaries of $4 million in 2018 and $4.2 million in 2019. For Wisdom, benefit expenses exceeded contributions by $150,000 in 2018 and $50,000 in 2019, resulting in accrued benefit costs on the balance sheet of $150,000 and $100,000 respectively.
The document discusses retirement plan contributions and expenses for two companies, Lanayru and Wisdom, in 2018 and 2019. For Lanayru, contributions were 5% of annual salaries of $4 million in 2018 and $4.2 million in 2019. For Wisdom, benefit expenses exceeded contributions by $150,000 in 2018 and $50,000 in 2019, resulting in accrued benefit costs on the balance sheet of $150,000 and $100,000 respectively.
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Submitted by: Limense, Princess Kathleen S.
(LANAYRU & WISDOM COMPANY)
1. Lanayru Company has a defined contribution plan that covers the existing employees. The terms of the plan required Lanayru to contribute 5% of the annual employee's salaries to the retirement plan each year. The payroll records show the annual salaries as follows: for 2018, P4,000,000 and for 2019, P4,200,000.
REQUIRED: Prepare the journal entries to record the employee benefit expense for 2018 and 2019.
ANSWER:
2018 Employee benefit expense 200,000
Cash (4,000,000 x 5%) 200,000
2019 Employee benefit expense 210,000
Cash (4,200,000 x 5%) 210,000
2. Wisdom Company reported the following information with respect to the defined benefit plan for 2018 and 2019:
2018 2019
Employee benefit expense 850,000 1,000,000
Contribution 700,000 1,050,000
REQUIRED: (a) Prepare the journal entries in 2018 and 2019. (b) Determine the amount of any prepaid or accrued benefit cost to be reported in the statement of financial position for each year.
