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

question 52

Multiple Choice

Merciful Industries has a beginning PBO balance of $600,000 and a settlement rate of 6%. As a result of an amendment to the current union contract, there are prior service costs of $52,000. What is the journal entry to record interest expense on the pension obligation?

• A) \(\begin{array}{|l|r|r|}
• \hline \text { Pension Expense } & 39,120\\
• \hline \text { Projected Benefit Obligation } & &39,120\\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|r|r|}
• \hline \text { Pension Expense} & 36,000\\
• \hline \text { Other Comprehensive Income} & &36,000\\
• \hline
• \end{array}\)
• C) \[\begin{array} { |l | r | r | }
• \hline \text { Pension Expense } & 130,400 & \\
• \hline \text { Projected Benefit Obligation } & & 130,400 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 48,880 & \\
• \hline \text { Other Comprehensive Income } & & 48,880 \\
• \hline
• \end{array}\]

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Definitions:

Square Deal Program

President Theodore Roosevelt's domestic program, which aimed at ensuring fair treatment for all citizens without regard to social status.

Active Government Role

Involves the government taking significant actions to influence and regulate economic, social, and other sectors to achieve desired outcomes, such as economic stability, social welfare, and public safety.

Minimum Wage

The lowest hourly, daily, or monthly remuneration that employers are legally required to pay to workers.

Unemployment Compensation

Financial payments made to individuals who have lost their jobs through no fault of their own, designed to provide a temporary source of income while they seek new employment.