Question

Exercise 20-23 Sunland Co. provides the following information about its postretirement benefit plan for the year 2017. Service cost Prior service cost amortization Contribution to the plan Actual and expected return on plan assets Benefits paid Plan assets at January 1, 2017 Accumulated postretirement benefit obligation at January 1, 2017 Accumulated OCI (PSC) at January 1, 2017 Discount rate $99,000 3,100 56,900 64,700 38,400 711,400 761,000 93,100 Dr. 9% Prepare a worksheet inserting January 1, 2017, balances, showing December 31, 2017, balances, and the journal entry recording postretirement benefit expense. (Enter all amounts a SUNLAND CO. Postretirement Benefit Worksheet-2017 General Journal Entries Memo Record Annual Postretirement Expense Postretirement Asset/ Liability Items OCI-Prior Service Cost Cash APBO Plan Assets Balance, Jan. 1, 2017 Service cost Interest cost Actual return Contributions Benefits Amortization of PSC Journal entry for 2017 Accumulated OCI, Dec. 31, 2016 Balance, Dec. 31, 2017 Click if you would like to show Work for this question: Open Show Work

Answer 1

Answer-

Computation of pension expense:

Service cost..............................................................$ 99,000

Interest cost ($761,000 X 9%)...............................68,490

Expected return on plan assets............................. (64,700)

Prior service cost amortization.............................. 3,100

Pension expense for 2010.......................................$105,890

Sunland company

Postretirement Benefit Worksheet

		JOURNAL ENTRIES				MEMO RECORD
ITEMS		ANNUAL POSTRETIREMENT EXPENSE	CASH	OCI PRIOR SERVICE COST	POSTRETIREMENT ASSET / LIABILITY	APBO	PLAN ASSETS
BALANCE , JAN 1, 2017					49,600 CR	761,000 CR	711,400 DR
SERVICE COST		99,000 DR				99,000 CR
INTEREST COST *		68,490 DR				68,490 CR
ACTUAL RETURN**		64,700 CR					64,700 DR
AMORTIZATION OF PSC		3,100 DR		3,100 CR
CONTRIBUTION			56,900 CR				56,900 DR
BENEFITS						38,400 DR	38,400 CR
JOURNAL ENTRY FOR 2017***		105,890 DR	56,900 CR	3,100 CR	45,890 CR
ACCUMULATED OCI, DEC 31 2016				93,100 DR
BAL DEC .31, 2017				90,000 DR	95,490 CR	890,090 CR	794,600 DR
* 68,490 = 761000*9% ***Pension Expense..........................................................105,890 ***Pension Asset/Liability.................................................45,890 Other Comprehensive Income (PSC)....................3,100 Cash..............................................................56,900