Question

Riverrun Co. provides medical care and insurance benefits to its retirees. In the current year, Riverrun agrees to pay $45,500 for medical insurance and contribute an additional $10,000 to a retirement program.

1. Record the entry for these accrued (but unpaid) benefits on December 31.
2. Assuming $5,500 of the retirement benefits are not to be paid for five years, how should this amount be reported on the current balance sheet?

Answer 1

The Solution is given below in the

Step-by-step explanation:

Requirement 1: Solution

Entries Debit Credit

Employee Benefits Expense $55,500

Medical insurance payable $45,500

Retirement program $10,000

Requirement 2: Solution

As the retirement program money is paid after 5 years it should be classified as a non-current liability as per the International accounting standard(Presentation of financial statements).