Reference no: EM131783783

Q1. On December 31, 2005, Brisbane Company had 100,000 shares of common stock outstanding and 30,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2006, Brisbane purchased 24,000 shares of common stock on the open market as treasury stock paying $40 per share. Brisbane sold 6,000 treasury shares on September 30, 2006, for $45 per share. Net income for 2006 was $180,905. Also outstanding during the year were stock options giving key personnel the option to buy 50,000 common shares at $40. During 2006, the average market price of the common shares was $50 with a closing price of $51 on December 31, 2006.

Required: Compute Brisbane's basic and diluted earnings per share for 2006.

Q2. Burrito Corporation has a defined benefit pension plan. Burrito received the following information for the current calendar year:

Projected benefit obligation

Balance, January 1                                        $150,000,000

Service cost                                                       25,000,000

Internet cost                                                       15,000,000

Benefit paid                                                      (12,000,000)

Balance, December 31                                    $178,000,000

Plan assets

Balance, January 1                                            $90,000,000

Actual return on plan assets                                11,000,000

Contribution                                                        23,000,000

Benefit paid                                                        (12,000,000)

Balance, December 31                                      $112,000,000

The expected long-term return on plan assets is 10%. There were no other relevant data for the year.

Required:

1) Determine Burrito's pension expense for the year.

2) Prepare the journal entries to record the pension expense and funding for the year.