The Susan Company has a defined benefit pension plan for its employees.The following information pertains to the pension plan: $\begin{array}{ll}
\text { Projected benefit obligation, December } 31,2010 & \$ 1,680,000 \
\text { F air value of plan assets, December 31, 2010 } & 1,739,000 \
\text { Accrued/prepaid pension cost (asset), December 31, 2009 } & 51,300
\end{array}$
The December 31, 2010 adjusting journal entries include a

Question

The Susan Company has a defined benefit pension plan for its employees.The following information pertains to the pension plan: $\begin{array}{ll}
\text { Projected benefit obligation, December } 31,2010 & \$ 1,680,000 \
\text { F air value of plan assets, December 31, 2010 } & 1,739,000 \
\text { Accrued/prepaid pension cost (asset), December 31, 2009 } & 51,300
\end{array}$
 The December 31, 2010 adjusting journal entries include a

Quizplus · Accepted Answer

The adjusting journal entries for a defined benefit pension plan typically involve accruing the pension expense and the related liability for the period. Therefore, the correct entry would be a debit to Accrued/Prepaid Pension Cost for the amount of the pension expense. The other choices are not appropriate because a credit to Other Comprehensive Income would suggest that gains or losses on the plan were recognized and a credit to Accrued/Prepaid Pension Cost would suggest that the liability decreased, which is not necessarily the case for a defined benefit plan.

The Susan Company Has a Defined Benefit Pension Plan for Its