PEN-1+Problem - plan In 2005 Springsteen paid cash to the...

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PEN-1: Pension Accounting – Defined Contribution Plan Springsteen Company has four professional employees that are covered by a defined contribution pension plan. The pension plan states that contributions equal to 10% of the employee’s annual salaries are to be paid in cash to the mutual fund chosen by the employee. In 2004, the employees’ salaries are as follows: Patti $ 75,000 Clarence 100,000 Danny 80,000 Max 65,000 Employees are expected to receive a 5% raise in both 2005 and 2006. In 2004, Springsteen paid cash to the mutual funds equal to its obligation under the terms of the
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Unformatted text preview: plan. In 2005, Springsteen paid cash to the mutual funds equal to only 95% of its obligation. In 2006, Springsteen paid the remainder of its 2005 obligation and 110% of its obligation for 2006. Required: (1) Determine Springsteen’s obligation under the pension plan for 2004, 2005, and 2006. (2) Prepare the journal entries that Springsteen would make in 2004, 2005, and 2006 related to its pension plan. (3) What amounts would be shown as assets and liabilities related to the pension plan on the balance sheets at 12/31/04, 12/31/05, and 12/31/06?...
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