Regling Company provides its employees vacation benefits and a defined benefit pension plan. Employees earned vacation pay

Regling Company provides its employees vacation benefits and a defined benefit pension plan. Employees earned vacation pay of $35,000 for the period. The pension formula calculated a pension cost of $201,250. Only $175,000 was contributed to the pension plan administrator. Provide the journal entry for the (a) vacation pay and (b) pension benefit.


Answer:











a.
 Vacation Pay Expense 35,000
Vacation Pay Payable 35,000
Vacation pay accrued for the period.
b.
 Pension Expense 201,250
Cash 175,000
Unfunded Pension Liability 26,250
To record pension cost and funding.





Kyrgyz Co. sold $200,000 of equipment during February under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On July 24, a customer required a $60 part replacement, plus $32 of labor under the warranty. Provide the journal entry for (a) the estimated warranty expense on February 28 for February sales, and (b) the July 24 warranty work.


Answer:











a.
 Feb. 28 Product Warranty Expense 12,000
Product Warranty Payable 12,000
To record warranty expense for February,
6% × $200,000.
b.
 July 24 Product Warranty Payable 92
Supplies 60
Wages Payable 32