The following information pertains to Rodney Companyâs definedbenefit pension plan for the year ended December 31, 2016: â¢Service cost for 2016 $ 280,000 ⢠Projected benefit obligation onJanuary 1, 2016 2,700,000 ⢠Fair value of pension assets atDecember 31, 2016 2,500,000 ⢠Accumulated other comprehensiveincome: prior service cost, 12/31/15 250,000 ⢠Pensions paid during2016 375,000 ⢠Employer contributions made to the pension trust inOctober, 2016 and charged to pension expense 150,000 ⢠Employercontributions owed at December 31, 2016 and made to the pensiontrust in January, 2017 50,000 ⢠Market-related value of pensionassets at January 1, 2016 2,650,000 ⢠Market-related value ofpension assets at December 31, 2016 2,700,000 ⢠Accumulated othercomprehensive income: unexpected gains (losses) at December 31,2015 300,000 ⢠Fair value of pension assets at January 1, 20162,400,000 ⢠Decrease in the projected benefit obligation due tochanges in actuarial assumptions as of December 31, 2016 150,000 â¢Expected return on pension assets 8% ⢠Discount rate 6% ⢠Averageremaining service period of current employees as of January 1, 2016(to be used for all amortization situations) 10 years Required: A.Complete the pension workpaper on page 2. Show (dr) or (cr) next toeach amount on the workpaper. The pension workpaper has to becompletely typed in order for the points earned on Part B to bereceived. B. Answer the following questions from the completedworkpaper: 1. What is interest cost for 2016? 2. What is the actualreturn for 2016? 3. What is the expected return for 2016? 4. Whatis the amount of the unexpected gain (loss) for 2016? 5. What isthe amortization of prior service cost for 2016? 6. What iscorridor amortization for 2016? 7. What is pension expense for2016? 8. In the adjusting journal entry at 12/31/16 to recordpension expense, what is the amount charged to pensionexpenseâhint: $150,000 was charged to pension expense in October,2016? 9. In the adjusting journal entry at 12/31/16 to recordpension expense, what is the amount plugged to pensionasset/liability? 10. Refer to the previous question. Is the amounta debit or a credit? 11. In the adjusting journal entry at 12/31/16to record pension expense, what is the amount debited or creditedto OCIâunexpected gains (losses)? 12. Refer to previous question.Is the amount a debit or a credit? 13. What is the projectedbenefit obligation at 12/31/16? 14. What is AOCIâPSC at 12/31/16?15. What is AOCIâunexpected gains (losses) at 12/31/16?
The following information pertains to Rodney Companyâs definedbenefit pension plan for the year ended December 31, 2016: â¢Service cost for 2016 $ 280,000 ⢠Projected benefit obligation onJanuary 1, 2016 2,700,000 ⢠Fair value of pension assets atDecember 31, 2016 2,500,000 ⢠Accumulated other comprehensiveincome: prior service cost, 12/31/15 250,000 ⢠Pensions paid during2016 375,000 ⢠Employer contributions made to the pension trust inOctober, 2016 and charged to pension expense 150,000 ⢠Employercontributions owed at December 31, 2016 and made to the pensiontrust in January, 2017 50,000 ⢠Market-related value of pensionassets at January 1, 2016 2,650,000 ⢠Market-related value ofpension assets at December 31, 2016 2,700,000 ⢠Accumulated othercomprehensive income: unexpected gains (losses) at December 31,2015 300,000 ⢠Fair value of pension assets at January 1, 20162,400,000 ⢠Decrease in the projected benefit obligation due tochanges in actuarial assumptions as of December 31, 2016 150,000 â¢Expected return on pension assets 8% ⢠Discount rate 6% ⢠Averageremaining service period of current employees as of January 1, 2016(to be used for all amortization situations) 10 years Required: A.Complete the pension workpaper on page 2. Show (dr) or (cr) next toeach amount on the workpaper. The pension workpaper has to becompletely typed in order for the points earned on Part B to bereceived. B. Answer the following questions from the completedworkpaper: 1. What is interest cost for 2016? 2. What is the actualreturn for 2016? 3. What is the expected return for 2016? 4. Whatis the amount of the unexpected gain (loss) for 2016? 5. What isthe amortization of prior service cost for 2016? 6. What iscorridor amortization for 2016? 7. What is pension expense for2016? 8. In the adjusting journal entry at 12/31/16 to recordpension expense, what is the amount charged to pensionexpenseâhint: $150,000 was charged to pension expense in October,2016? 9. In the adjusting journal entry at 12/31/16 to recordpension expense, what is the amount plugged to pensionasset/liability? 10. Refer to the previous question. Is the amounta debit or a credit? 11. In the adjusting journal entry at 12/31/16to record pension expense, what is the amount debited or creditedto OCIâunexpected gains (losses)? 12. Refer to previous question.Is the amount a debit or a credit? 13. What is the projectedbenefit obligation at 12/31/16? 14. What is AOCIâPSC at 12/31/16?15. What is AOCIâunexpected gains (losses) at 12/31/16?
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
