Exhibit 20-2 Minnie Co.has an unfunded prepaid/accrued pension cost of $2, 000 (debit balance)at December 31, 2010.The following information pertains to 2011:
$\begin{array}{ll}
\text { Pension expense } & \$ 320,000 \
\text { Projected benefit obligation, December 31, } 2011 & 840,000 \
\text { Contributions } & 330,000 \
\text { Plan assets (fair value), December 31, 2011 } & 810,000
\end{array}$

-Refer to Exhibit 20-2.The balance in Prepaid/Accrued Pension Cost at December 31, 2011, should be

Question

Exhibit 20-2 Minnie Co.has an unfunded prepaid/accrued pension cost of $2, 000 (debit balance)at December 31, 2010.The following information pertains to 2011:
$\begin{array}{ll}
\text { Pension expense } & \$ 320,000 \
\text { Projected benefit obligation, December 31, } 2011 & 840,000 \
\text { Contributions } & 330,000 \
\text { Plan assets (fair value), December 31, 2011 } & 810,000
\end{array}$
 
-Refer to Exhibit 20-2.The balance in Prepaid/Accrued Pension Cost at December 31, 2011, should be

Quizplus · Accepted Answer

The balance in Prepaid/Accrued Pension Cost is calculated as the beginning balance plus contributions minus pension expense. Starting with a $2,000 debit, adding $330,000 contributions, and subtracting $320,000 pension expense results in a $12,000 debit. However, the projected benefit obligation exceeds plan assets by $30,000, resulting in a $30,000 credit balance.

Exhibit 20-2 Minnie Co -Refer to Exhibit 20-2