ABC Corporation provides a defined benefit pension plan for its employees. A combination adjusting entry should be made to correctly account for this type of pension plan given the following items of information for the 2014 plan year, including the recording of pension expense and the employer's contribution to the pension plan in 2014.
Note: Use the summary entry method as demonstrated and discussed in the chapter lectures on pension accounting to prepare the adjusting entry.
Pension asset/liability (January 1) $0
Actual return on plan assets $40,000
Expected return on plan assets $20,000
Contributions (funding) in 2014 $37,000
Fair value of plan assets (December 31) $77,000
Settlement rate 10%
Projected benefit obligation (January 1) $0
Service cost $60,000
Benefits paid in 2014 $0
I came up with the following adjusting entries:
Pension Expense 40,000
Pension Related Asset 14,000
Other Comp. Income 17,000
Cash 37,000
Is this correct?
ABC Corporation provides a defined benefit pension plan for its employees. A combination adjusting entry should be made to correctly account for this type of pension plan given the following items of information for the 2014 plan year, including the recording of pension expense and the employer's contribution to the pension plan in 2014.
Note: Use the summary entry method as demonstrated and discussed in the chapter lectures on pension accounting to prepare the adjusting entry.
Pension asset/liability (January 1) $0
Actual return on plan assets $40,000
Expected return on plan assets $20,000
Contributions (funding) in 2014 $37,000
Fair value of plan assets (December 31) $77,000
Settlement rate 10%
Projected benefit obligation (January 1) $0
Service cost $60,000
Benefits paid in 2014 $0
I came up with the following adjusting entries:
Pension Expense 40,000
Pension Related Asset 14,000
Other Comp. Income 17,000
Cash 37,000
Is this correct?
Related questions
he following defined pension data of Rydell Corp. apply to theyear 2014.
| Projected benefit obligation, 1/1/14 (before amendment) | $564,000 | ||
| Plan assets, 1/1/14 | 548,900 | ||
| Pension liability | 15,100 | ||
| On January 1, 2014, Rydell Corp., through plan amendment, grants prior service benefits having a presentvalue of | 128,900 | ||
| Settlement rate | 10 | % | |
| Service cost | 60,000 | ||
| Contributions (funding) | 74,200 | ||
| Actual (expected) return on plan assets | 59,900 | ||
| Benefits paid to retirees | 47,900 | ||
| Prior service cost amortization for 2014 | 20,200 |
For 2014, prepare a pension worksheet for Rydell Corp. that showsthe journal entry for pension expense and the year-end balances inthe related pension accounts.
Problem 20-3
Gottschalk Company sponsors a defined benefit plan for its 100employees. On January 1, 2014, the companyâs actuary provided thefollowing information.
| Accumulated other comprehensive loss (PSC) | $155,100 | |
| Pension plan assets (fair value and market-related assetvalue) | 200,400 | |
| Accumulated benefit obligation | 268,500 | |
| Projected benefit obligation | 380,600 |
The average remaining service period for the participatingemployees is 10 years. All employees are expected to receivebenefits under the plan. On December 31, 2014, the actuarycalculated that the present value of future benefits earned foremployee services rendered in the current year amounted to $53,400;the projected benefit obligation was $495,500; fair value ofpension assets was $277,200; the accumulated benefit obligationamounted to $367,600. The expected return on plan assets and thediscount rate on the projected benefit obligation were both 10%.The actual return on plan assets is $11,400. The companyâs currentyearâs contribution to the pension plan amounted to $65,400. Nobenefits were paid during the year.
Determine the components of pension expense that the companywould recognize in 2014.
Components of Pension Expense
Service Cost - 53,400
Interest on Projected Benefit Obligation - 38,060
Actual Return on Plan Assets - (11,400)
Unexpected Loss - (8,640)
Amortization of Gain or Loss - 0
Amortization of Prior Service Cost - 15,510
Pension Expense - 86,930
Prepare the journal entry to record the pension expense and thecompanyâs funding of the pension plan in 2014
Other Comprehensive Income (G/L) -
Pension Expense -
Cash -
Pension Asset/Liability -
Other Comprehensive Income (PSC) -
Compute the amount of the 2014 increase/decrease in gains orlosses and the amount to be amortized in 2014 and 2015.
2014 Increase/Decrease in _____________ $_____________
Amortization in 2014
Amortization in 2015
Indicate the pension amounts reported in the financial statementas of December 31, 2014.
Gottschalk Company Income Statement (Partial) For the year endedDcember 31, 2014
| $ |
Gottschalk Company Comprehensive Income Statement December 31,2014
Gottschalk company Balance Sheer (Partial) December 31, 2014
