The following facts apply to the pension plan of Boudreau Inc. for the year 2014.

E20-4 The following facts apply to the pension plan of Boudreau Inc. for the year 2014.

Plan assets, January 1, 2014		$490,000
Projected benefit obligation, January 1, 2014		490,000
Settlement rate		8	%
Service cost		40,000
Contributions (funding)		25,000
Actual and expected return on plan assets		49,700
Benefits paid to retirees		33,400

Using the preceding data, compute pension expense for the year 2014. As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for 2014 and the year-end balances in the related pension accounts.

BOUDREAU INC. Pension Worksheet—2014

General Journal Entries

Memo Record

Items

Annual Pension Expense

Cash

Pension Asset/ Liability

Projected Benefit Obligation

Plan Assets

Balance, January 1, 2014

Service cost

Interest cost

Actual return

Contributions

Benefits

Journal entry, December 31

Balance, December 31, 2014

TUTORIAL PREVIEW

BOUDREAU INC. Pension Worksheet—2014
	General Journal Entries			Memo Record
Items	Annual Pension Expense	Cash	Pension Asset / Liability	Projected Benefit Obligation	Plan Assets
Balance, January 1, 2014				490,000 Cr.	490,000 Dr.

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E20-1 The following information is available for the pension plan of Radcliffe Company

E20-1 The following information is available for the pension plan of Radcliffe Company for the year 2014.

Actual and expected return on plan assets		$ 15,000
Benefits paid to retirees		40,000
Contributions (funding)		90,000
Interest/discount rate		10	%
Prior service cost amortization		8,000
Projected benefit obligation, January 1, 2014		500,000
Service cost		60,000

Compute pension expense for the year 2014.

Pension expense for 2014$

Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

TUTORIAL PREVIEW

(a)        Computation of pension expense:

Service cost	$  60,000
Interest cost ($500,000 X .10)	50,000

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Kansas Company uses a standard cost accounting system. In 2014

Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,000 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,000 direct labor hours. During the year, 117,000 pounds of raw materials were purchased at $0.92 per pound. All materials purchased were used during the year.

(a) If the materials price variance was $3,510 favorable, what was the standard materials price per pound? (Round answer to 2 decimal places, e.g. 2.75.)

Standard materials price per pound

$

(b) If the materials quantity variance was $4,750 unfavorable, what was the standard materials quantity per unit?

(c) What were the standard hours allowed for the units produced?

(d) If the labor quantity variance was $7,200 unfavorable, what were the actual direct labor hours worked

(e) If the labor price variance was $9,080 favorable, what was the actual rate per hour?

(f) If total budgeted manufacturing overhead was $360,000 at normal capacity, what was the predetermined overhead rate?

(g) What was the standard cost per unit of product?

(h) How much overhead was applied to production during the year?

Using one or more answers above, what were the total costs assigned to work in process?

TUTORIAL PREVIEW

a.         Material price variance = (AQ X AP) – (AQ X SP) = 3,510 F

                                               

= AQ (AP – SP) = 3510 F

                                               

117,000 (AP – SP) = 3,510 F

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Katherine Irving, controller of Lotan Corp., is aware

CA22-4 (Analysis of Various Accounting Changes and Errors) 

Katherine Irving, controller of Lotan Corp., is aware of a pronouncement on accounting changes. After reading the pronouncement, she is confused about what action should be taken on the following items related to Lotan Corp. for the year 2014.

3.One division of Lotan Corp., Hawthorne Co., has consistently shown an increasing net income from period to period. On closer examination of its operating statement, it is noted that bad debt expense and inventory obsolescence charges are much lower than in other divisions. In discussing this with the controller of this division, it has been learned that the controller has increased his net income each period by knowingly making low estimates related to the write-off of receivables and inventory.

Instructions

Katherine Irving has come to you, as her CPA, for advice about the situations above. 

Prepare a report, indicating the appropriate accounting treatment that should be given for each of these situations.

TUTORIAL PREVIEW

This situation is considered a correction of an error.

The general rule is that careful estimates which later 

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