Merciful Industries Has a Beginning PBO Balance of $900,000 and a Settlement

question 137

Multiple Choice

Merciful Industries has a beginning PBO balance of $900,000 and a settlement rate of 6%. The expected return is 7%. The beginning balance of pension plan assets is $1,000,000. What is the journal entry to record the expected return on plan assets?

• A) \(\begin{array}{|l|r|r|}
• \hline \text { Pension Plan Assets } & 70,000\\
• \hline \text { Pension Expense - Expected Return } &&70,000\\
• \hline
• \end{array}\)
• B) \(\begin{array}{l}
• \text { Pension Expense } &63,000\\
• \text { Other Comprehensive Income }&&63,00
• \end{array}\)
• C) \(\begin{array}{|l|r|r|}
• \hline \text { Pension Expense } & 66,500\\
• \hline \text { Pension Plan Assets } &&66,500\\
• \hline
• \end{array}\)
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Pension Expense } & 9,000 & \\
• \hline \text { Other Comprehensive Income } & & 9,000 \\
• \hline
• \end{array}\]

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