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?

Question

Business

Brandon Dennis

14 January, 20:12

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?

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Answers (1)

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Izaiah Choi · Answer 1

The Solution is given below in the

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).