Question

Data pertaining to the postretirement health care benefit plan of Sterling Properties include the following for 2018: ($ in 0008) $ 136 700 Service cost Accumulated postretirement benefit obligation, January 1 Plan assets (fair value), January 1 Prior service cost-AOCI Net gain-AOCI (2018 amortization, $2) Retiree benefits paid end of year) Contribution to health care benefit fund (end of year) Discount rate, 8% Return on plan assets (actual and expected), 10% none 100 200 Required: 1. Determine the postretirement benefit expense for 2018. 2. Prepare the appropriate journal entries to record the postretirement benefit expense, funding, and retiree benefits for 2018. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the postretirement benefit expense for 2018. (Amounts to be deducted should be indicated with a minus sign.) ($ in 000s) Postretirement benefit expense Required 1 Required 2 >

Answer 1

Required 1:

Calculation

Service Cost	136
Interest Cost (700*8%)	56
Return on Plan Assets (30*10%)	-3
Amortization of Prior Service Cost	0
Amortization of Net Gain	-2
Postretirement Benefit Expense	187

Required 2:

Journal Entries:

Account Titles	Debit	Credit
Postretirement Benefit Expense	$187
Plan Assets (30*10%)	$3
Net Gain-AOCI	$2
Accumulated Postretirement benefit Obligation (136 + 56)		$192
(To record postretirement benefit expense)
Plan Assets	$200
Cash (Contributions to Fund)		$200
(To record the funding)
Postretirement Benefit Obligation	$88
Plan Assets (Retiree Benefits)		$88
(To record the payment of benefits)