Question

Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2020 and 2021.

		2020		2021
Plan assets (fair value), December 31		$699,000		$849,000
Projected benefit obligation, January 1		700,000		800,000
Pension asset/liability, January 1		140,000	Cr.	?
Prior service cost, January 1		250,000		240,000
Service cost		60,000		90,000
Actual and expected return on plan assets		24,000		30,000
Amortization of prior service cost		10,000		12,000
Contributions (funding)		115,000		120,000
Accumulated benefit obligation, December 31		500,000		550,000
Interest/settlement rate		9%		9%

Instructions

• Compute pension expense for 2020 and 2021.

• Prepare the journal entries to record the pension expense and the company's funding of the pension plan for both years.

Answer 1

computation of pension expense particulars 2020 2021 service cost 60000 90000 Interest ar @ 9.1. 63000 72000 (700000 / 800000) Expected return (24000) (30 000) prior service cost 10000 12000 luyooo pension expense 104000 credit 10000 23000 115000 entries for 2000 pebit pension expense 10 9000 pension asset / liability [39000] 309000 other comprehensive income (PSC) Other comprehensive income (GL) cash [Being pension paid ] entries for 2021 pension expense pension asset / liability 144000 1 2000 12000 Other comprehensive income (PSC) 120000 cash (Being pension paid]