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Problem 20-1 Arlene

Name: Date:
Instructor: Course:
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield
P20-1 (2-Year Worksheet) On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.
Projected benefits obligation $4,500,000
Fair value of plan assets 4,200,000
The interest (settlement) rate applicable to the plan is 10% On January 1, 2015, the company amends its pension
agreement so that service costs of $500,000 are created. Other data related to the pension plan are as follows:
2014 2015
Service costs $150,000 $180,000
Prior service costs amortization 0 90,000
Contributions (funding) to the plan 240,000 285,000
Benefits paid 200,000 280,000
Actual return on plan assets 252,000 260,000
Expected rate of return on assets 6% 8%
Instructions:
(a) Prepare a pension worksheet for the pension plan for 2014 and 2015.
HARRINGTON COMPANY
Pension Worksheet—2014 and 2015
General Journal Entries Memo Record
Items Annual Pension Expense Cash OCI - Prior Service Cost OCI - Gain/Loss Pension Asset/ Liability Projected Benefit Obligation Plan Assets
Balance, Jan. 1, 2014 Amount Amount Amount
(a) Service cost Amount Amount
(b) Interest cost Amount Amount
(c) Actual return Amount Amount
(d) Contributions Amount Amount
(e) Benefits Amount Amount
Journal entry, 12/31/14 Formula Formula Formula Formula Formula Formula Formula
Accum OCI, 12/31/13
Balance, Dec. 31, 2014 Formula Formula Formula
(f) Additional PSC Amount Amount
January 1, 2015 Formula
(g) Service cost Amount Amount
(h) Interest cost Formula Formula
(i) Actual return Amount Amount
(j) Unexpected loss Formula Amount
(k) Amortization of PSC Amount Amount
(l) Contributions Amount Amount
(m) Benefits Amount Amount
Journal entry, 12/31/15 Formula Formula Formula Formula Formula
Accum OCI, 12/31/14 Amount Amount
Balance, Dec. 31, 2015 Formula Formula Formula Formula Formula
Area for calculations as desired
Area for calculations as desired
Area for calculations as desired
(b) For 2015, prepare the journal entry to record pension-related amounts.
Account title Amount
Account title Amount
Account title Amount
Account title Amount
Account title Amount

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Problem 20-3

Name Problem 20-3
Section
Date Gottschalk Company
(a)
SCHEDULE
Computation of Pension Expense
For the Year Ended December 31, 2014
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
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10 10
(b)
Account Titles Debit Credit
1 2014 1
2 2
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(c)
SCHEDULE
Computation of the Increase or Decrease in Unrecognized Gains or Losses
For the Year Ended December 31, 2012
1 (1) 12/31/14 new actuarially computed PBO $490,000 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 (2) 12/31/14 fair value of plan assets $276,000 10
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12 12
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22 Comments on gain or loss amortization in 2014 and 2015: 22
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(d)
Financial Statements - 2014
1 Income Statement: 1
2 2
3 3
4 Comprehensive Income Statement: 4
5 5
6 6
7 7
8 8
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10 10
11 11
12 Balance Sheet: 12
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14 14
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Gottschalk Company
Pension Worksheet - For the Year Ended December 31, 2014
1 General Journal Entries Memo Record 1
2 Annual Pension OCI - Prior OCI - Pension Plan 2
3 Items Expense Cash Service Cost Gain/Loss Asset/Liability PBO Assets 3
4 Balance, January 1, 2014 180,000 Cr. 380,000 Cr. 200,000 Dr. 4
5 5
6 6
7 7
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10 10
11 11
12 12
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14 Balance, December 31, 2014 14
15 15
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22 22
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24 24

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Problem 22-1

Name: Date:
Instructor: Course:
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield
P22-1 (Change in Estimate and Error Correction) Holtzman Company is in the process of preparing its financial statements for 2014. Assume that no entries for depreciation have been recorded in 2014. The following information related to depreciation of fixed assets is provided to you.
1. Holtzman purchased equipment on Jan 2, 2011, for $85,000 At the time, the equipment
had an estimated useful life of 10 years with a $5,000 salvage value. The equipment
is depreciated on a straight-line basis. On January 2, 2014, as a result of additional information, the
company determined that the equipment has a remaining useful life of 4 years with a
$3,000 salvage value.
During 2014, Holtzman changed from the double-declining balance method for its building to the
straight-line method. The building originally cost $300,000 It had a useful life of
10 years and a salvage value of $30,000 The following computations
present depreciation on both bases for 2012 and 2013.
2013 2012
Straight-line $27,000 $27,000
Declining balance $48,000 $60,000
3. Holtzman purchased a machine on July 1, 2012, at a cost of $120,000 The machine
has a salvage value of $16,000 and a useful life of 8 years.
Holtzman’s bookkeeper recorded straight-line depreciation in 2012 and 2013 but failed to consider the salvage value.
Instructions:
(a) Prepare the journal entries to record depreciation expense for 2014 and correct any errors made to date related to the information provided.
(1) Cost of equipment Amount
Less: Salvage value Amount
Depreciable cost Formula
Depreciation to 2014
2011 Amount Number Formula
2012 Amount Number Formula
2013 Amount Number Formula
Formula
Depreciation in 2014
Cost of equipment Amount
Less: Depreciation to 2014 Amount
Book value, January 1, 2014 Formula
Less: Salvage value Amount
Depreciable cost Formula
Remaining years Number
Depreciation in 2014 Formula
Account title 2000 Amount
Account title Amount
(2) Cost of building Amount
Less: Depreciation to 2014
2012 Amount
2013 Amount
Book value, January 1, 2014 Formula
Less: Salvage value Amount
Depreciable cost Formula
Remaining years Number
Depreciation in 2014 Formula
Account title 2000 Amount
Account title Amount
(3) Account title Amount
Account title Amount
Account title Amount
Account title Amount
Depreciation recorded in 2012: [$120,000 ÷ 8 * (1/2)] Amount
Depreciation that should be recorded in 2012: [($120,000 – $16,000) ÷ 8 * (1/2)] Amount
Depreciation recorded in 2013: ($120,000 / 8) Amount
Depreciation that should be recorded in 2013: [($120,000 – $16,000) ÷ 8] Amount
Depreciation taken Depreciation that should be taken Differences
2012 Amount Amount Formula
2013 Amount Amount Formula
Formula Formula Formula
(b) Show comparative net income for 2013 and 2014. Income before depreciation expense was
$300,000 in 2014, and was $310,000 in 2013. Ignore taxes.
HOLTZMAN COMPANY
Comparative Income Statements
For the Years 2014 and 2013
2014 2013
Income before depreciation expense Amount Amount
Depreciation Expense Amount Amount
Net income Formula Formula
Depreciation Expense 2014 2013
Equipment Amount Amount
Building Amount Amount
Machine Amount Amount
Formula Formula

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Problem 22-2 Brittany

Name Brittany Aumick Problem 22-2
Section Intermediate Accounting 3
Date 25-Aug-15 Botticelli Inc.
A.)
1. In 2012 the bad debt expense should not have been reduced by $10,000. When there is a
change in the experience rate that would be viewed as a change in estimate. That then should
be handled or dealt with prospectively.
2. When there is a change from LIFO to FIFO that is considered a change in accounting
principle which must be dealt with retrospecitively.
3 A.) When there is an inventory error a prior period adjustment must take place which then means
the 2014 and 2015 financial statements should be restated.
3 B.) This situation seems as though it was handled properly.
B.)
Botticelli Inc.
Comparative Income Statements
For the Years 2012 through 2015
2012 2013 2014 2015
Net Income (Unadjusted) $140,000 $160,000 $205,000 $276,000
Bad Debt Expense Adjustment ($10,000)
Inventory Adjustment (FIFO) $15,000 $5,000 $10,000 ($16,000)
Inventory Overstatement ($14,000) $14,000
Net income (Adjusted) $145,000 $165,000 $201,000 $274,000
Income before extraordinary gain $145,000 $135,000 $201,000 $274,000
Extraordinary Gain $30,000
Net Income $145,000 $165,000 $201,000 $274,000

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