Merciful Industries Has a Beginning PBO Balance of $600,000 and a Settlement

question 66

Multiple Choice

Merciful Industries has a beginning PBO balance of $600,000 and a settlement rate of 6%. What is the journal entry to record interest expense on the pension obligation?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 36,000 & \\
• \hline \text { Projected Benefit Obligation } & & 36,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 36,000 & \\
• \hline \text { Other Comprehensive Income } & & 36,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 600,000 & \\
• \hline \text { Projected Benefit Obligation } & & 600,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l| r | r | }
• \hline \text { Pension Expense } & 600,000 & \\
• \hline \text { Other Comprehensive Income } & & 600,000 \\
• \hline
• \end{array}\]

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Definitions:

Factor Markets

Markets where services of the factors of production (notably labor, land, and capital) are bought and sold.

New York Mets

A professional baseball team based in New York City, part of the National League division of Major League Baseball.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services for profit.

Factor Market

The marketplace where services of the factors of production (notably land, labor, capital) are bought and sold.