19-Solutions to Suggested P19-1

19-Solutions to Suggested P19-1 - Disability Benefits...

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PROBLEM 19-1 This is partly a defined benefit plan because the plan specifies the benefits to be received by employees – full salary for the first three months. To the extent that the insurance company assumes the risk for the long-term portion of the salary continuation plan for a fixed premium of $18,000, this portion of the benefit plan is a defined contribution plan. 2011: Payment of premium to insurance company: Long-term Disability Benefit Expense . ...................... 12,000 Long-term Disability Benefits Payable . ..................... 6,000 Cash . .................................................................... 18,000 Late October, 2011: Long-term Disability Benefit Expense . ...................... 16,200 Disability Benefits Payable ($5,400 X 3) . ........... 16,200 (based on the “event accrual” approach discussed in Chapter 13) November 2011:
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Unformatted text preview: Disability Benefits Payable . ....................................... 5,400 Cash . .................................................................... 5,400 December, 2011: Disability Benefits Payable . ....................................... 5,400 Cash . .................................................................... 5,400 PROBLEM 19-1 (Continued) 2012: January 2012 – payment of third month’s waiting period: Disability Benefits Payable . ....................................... 5,400 Cash . .................................................................... 5,400 Payment of premium to insurance company: Long-term Disability Benefit Expense . ...................... 12,000 Long-term Disability Benefits Payable . ..................... 6,000 Cash ...................................................................... 18,000...
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This note was uploaded on 10/26/2011 for the course ACCT 3410 taught by Professor Jobs during the Spring '11 term at Kwantlen Polytechnic University.

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19-Solutions to Suggested P19-1 - Disability Benefits...

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