Question 25
Blossom Company received the following selected information fromits pension plan trustee concerning the operation of the companyâsdefined benefit pension plan for the year ended December 31,2017.
January 1, 2017
December 31, 2017
Projected benefit obligation
$1,488,000
$1,514,000
Market-related and fair value of plan assets
809,000
1,135,900
Accumulated benefit obligation
1,600,000
1,718,800
Accumulated OCI (G/L)âNet gain
0
(198,800
)
The service cost component of pension expense for employee servicesrendered in the current year amounted to $76,000 and theamortization of prior service cost was $118,800. The companyâsactual funding (contributions) of the plan in 2017 amounted to$246,000. The expected return on plan assets and the actual ratewere both 10%; the interest/discount (settlement) rate was 10%.Accumulated other comprehensive income (PSC) had a balance of$1,188,000 on January 1, 2017. Assume no benefits paid in 2017.
Determine the amounts of the components of pension expense thatshould be recognized by the company in 2017. (Enteramounts that reduce pension expense with either a negative signpreceding the number e.g. -45 or parenthesis e.g.(45).)
Components of Pension Expense
Actual Return on Plan AssetsAmortization of Prior ServiceCostBenefits PaidContributions to PlanExpected Return on PlanAssetsInterest on Projected Benefit ObligationService Cost
$
Actual Return on Plan AssetsAmortization of Prior ServiceCostBenefits PaidContributions to PlanExpected Return on PlanAssetsInterest on Projected Benefit ObligationService Cost
Actual Return on Plan AssetsAmortization of Prior ServiceCostBenefits PaidContributions to PlanExpected Return on PlanAssetsInterest on Projected Benefit ObligationService Cost
Actual Return on Plan AssetsAmortization of Prior ServiceCostBenefits PaidContributions to PlanExpected Return on PlanAssetsInterest on Projected Benefit ObligationService Cost
SHOW LIST OF ACCOUNTS
Prepare the journal entry to record pension expense and theemployerâs contribution to the pension plan in 2017.(Credit account titles are automatically indented whenamount is entered. Do not indent manually. If no entry is required,select "No Entry" for the account titles and enter 0 for theamounts.)
Account Titles and Explanation
Debit
Credit
(To record pension expense and employerâs contribution)
SHOW LIST OF ACCOUNTS
Indicate the pension-related amounts that would be reported onthe income statement and the balance sheet for Blossom Company forthe year 2017.
Blossom Company
Income Statement (Partial)
December 31, 2017For the Year Ended December 31, 2017For theQuarter Ended December 31, 2017
DividendsExpensesNet Income / (Loss)Retained Earnings â January1, 2017Retained Earnings â December 31, 2017RevenuesTotalExpensesTotal Revenues
Amortization of PSC InterestExpense PensionExpense RentExpense Service Cost
$
Blossom Company
Comprehensive Income Statement
December 31, 2017For the Year Ended December 31, 2017For theQuarter Ended December 31, 2017
DividendsExpensesNet Income / (Loss)Retained Earnings â January1, 2017Retained Earnings â December 31, 2017RevenuesTotalExpensesTotal Revenues
$XXXX
Amortization of PSCComprehensive IncomeInterest ExpenseLiabilityGainPension ExpenseRent ExpenseService CostOther ComprehensiveIncome (Loss)
Amortization of PSC ComprehensiveIncome InterestExpense LiabilityGain PensionExpense RentExpense ServiceCost Other Comprehensive Income (Loss)
$
Amortization of PSC ComprehensiveIncome InterestExpense LiabilityGain PensionExpense RentExpense ServiceCost Other Comprehensive Income (Loss)
Amortization of PSCComprehensive IncomeInterest ExpenseLiabilityGainPension ExpenseRent ExpenseService CostOther ComprehensiveIncome (Loss)
$XXXX
Blossom Company
Balance Sheet (Partial)
December 31, 2017For the Year Ended December 31, 2017For theQuarter Ended December 31, 2017
Current AssetsLiabilitiesIntangible AssetsProperty, Plant andEquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotalCurrent LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotalLiabilities and Stockholders' EquityTotal Property, Plant andEquipmentTotal Stockholders' Equity
Accounts PayableAccounts ReceivableAccumulatedDepreciationAccumulated Other Comprehensive Income (G/L)AccumulatedOther Comprehensive Loss (G/L)Accumulated Other ComprehensiveIncome (PSC)Accumulated Other Comprehensive Loss (PSC)CommonStockPension LiabilityRetained Earnings
$
Current AssetsCurrent LiabilitiesIntangible AssetsLong-termInvestmentsLong-term LiabilitiesProperty, Plant andEquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotalCurrent LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotalLiabilities and Stockholders' EquityTotal Long-termInvestmentsTotal Long-term LiabilitiesTotal Property, Plant andEquipmentTotal Stockholders' Equity
Accounts PayableAccounts ReceivableAccumulatedDepreciationAccumulated Other Comprehensive Income (G/L)AccumulatedOther Comprehensive Loss (G/L)Accumulated Other ComprehensiveIncome (PSC)Accumulated Other Comprehensive Loss (PSC)CommonStockPension LiabilityRetained Earnings
$
Accounts PayableAccounts ReceivableAccumulatedDepreciationAccumulated Other Comprehensive Income (G/L)AccumulatedOther Comprehensive Loss (G/L)Accumulated Other ComprehensiveIncome (PSC)Accumulated Other Comprehensive Loss (PSC)CommonStockPension LiabilityRetained Earnings
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Related questions
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
