[Amayr Ahmed]

I got what what you said.
Just one question: (since you have seen the question)
Why the retained earnings are Debited (reduced) with $105..?

To me only the “Actuarial gains” i.e $15 should be charged to Retained Earnings.

As for the “Contribution” issue,the question states that those dumb director took it as for “Receivables”. in other words they made a entry:
DEBIT Receivables CREDIT Cash.
When the actual entry should have been:
DEBIT Def. Benefit plan CREDIT Contributions.

So in nutshell, even if we correct this “Contribution” issue, it shouldn’t be reducing (or have any effect) on retained earnings.

I hope you reply back.I hate when this question confuses me. 🙂

[Amayr Ahmed]

Yeah, i got you and that ugly account. 😉
Thanks for your help,i guess i underestimated the double entry system.
Cheers.

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