Introduction to Governmental & Not-for-Profit Accounting - Problem 8-1: Journal Entries and Statements for a Pension Fund

Problem 8-1: Journal Entries and Statements for a Pension Trust Fund
(a) Journal Entries
1. Cash $750,000
Additions – pension contributions – employer $491,250
Additions – pension contributions – plan members $258,750
To record contributions received.

2. Investments – corporate stocks $500,000
Cash $500,000
To record purchase of corporate stocks.

3. Cash $210,000
Investment income receivable $210,000
To record collection of accrued interest.

Cash $4,290,000
Investment income receivable $510,000
Additions – dividends $850,000
Additions – interest on investments $3,950,000
To record collection of investment income in the form of dividends and interest.

4. Deductions – retirement benefits $3,500,000
Cash $3,500,000
To record payment of employee retirement benefits.

5. Investments – U.S government securities $1,100,000
Cash $1,100,000
To record acquisition of additional U.S. government securities.

6. Deductions – administrative costs $175,000
Cash $150,000
Accounts Payable $25,000
To record payment of administrative costs and accrued administrative costs.

Accrued Expenses $12,000
Cash $12,000
To record payment of accrued expenses from 2011.

7. Cash $600,000
Investments – U.S. government securities $500,000
Additions – interest on investments $100,000
To record redemption of investment in U.S. government securities.

8. Investments – corporate stocks $1,000,000
Additions – net appreciation in fair value of investments $1,000,000
To record increase in fair value of investments.