(Journal entries for a Pension Trust Fund) Moody Village ...

[crobinson2013]

(Journal entries for a Pension Trust Fund)
 
  Moody Village maintains a Pension Trust Fund for its employees. At the start of the year, the Fund holds cash of 150,000 and investments that have a fair value of 4,000,000 .
 
  The Fund has the following transactions. Prepare entries to record them in the Fund's accounts
 
   a. Bills the General Fund 200,000 for the required annual contribution. The pension plan does not require contributions from the employees
   b. Receives payment of 200,000 from the General Fund
   c. Receives interest and dividend income of 150,000 in cash on its investment portfolio
   d. Receives 215,000 from selling investments carried on the books at 200,000
   e. Makes new investments totaling 275,000
   f. Pays annuity benefits of 325,000 to retirees or their spouses
   g. Pays administrative expenses of 100,000 in cash
   h. The investments held by the Fund have a fair value of 4,100,000 at year-end.

Question 2

It is not necessary to post adjusting entries.
 a. True
   b. False
   Indicate whether the statement is true or false

[Jmfn03]

Answer to Question 1

a. Due from General Fund 200,000
Additions - pension contributions - employer 200,000

b. Cash 200,000
Due from General Fund 200,000

c. Cash 150,000
Additions - investment interest and dividends 150,000

d. Cash 215,000
Investments 200,000
Additions - net appreciation in fair value of investments 15,000

e. Investments 275,000
Cash 275,000

f. Deductions - retirement annuities 325,000
Cash 325,000

g. Deductions - administrative expenses 100,000
Cash 100,000

h. Investments 25,000
Additions - net appreciation in fair value of investments 25,000

Note - The net appreciation in fair value of investments in entry h. is the difference between the carrying value of investments before revaluation (4,075,000) and the new fair value (4,100,000). The carrying value before revaluation is the opening carrying value (4,000,000) and the changes resulting from transactions d. and e.

Answer to Question 2

False

[crobinson2013]

Thank you

[Jmfn03]

Happy to help you