Question

Exercise 20-10 Webb Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan. Plan assets Projected benefit obligation Pension asset/liability Accumulated OCI (PSC) $480,000 600,000 120,00D 100,000 Dr As a result of the operation of the plan during 2017, the following additional data are provided by the actuary. Service cost Settlement rate, 9% Actual return on plan assets Amortization of prior service cost Expected return on plan assets Unexpected loss from change in projected benefit obligation, $90,000 55,000 19,000 52,000 due to change in actuarial predictions Contributions Benefits paid retirees 76,000 99,000 85,000 Using the data above, compute pension expense for Webb Corp. for the year 2017 by preparing a pension worksheet. (Enter all amounts as positive.)

Answer 1

	Webb Corporation
	Pension Worksheet
			Journal Entries			Memo Record
Items	Annual Pension Expense	Cash	OCI-Prior Service cost	OCI-Gain/Loss	Pension Assets/Liabilitiy	Projected benefit obligation	Plan Assets
Balance on Jan1,2017					$      -1,20,000.00	$-6,00,000.00	$ 4,80,000.00
Service Cost	$     90,000.00					$    -90,000.00
Interest Cost=($600000*9%)	$     54,000.00					$    -54,000.00
Actual Return	$   -55,000.00						$     55,000.00
Unexpected gain=(Actual Retun-Expected Return)=($55000-$52000)	$       3,000.00			$ -3,000.00
Amortization of PSC	$     19,000.00		$    -19,000.00
Liability Increase				$ 76,000.00		$    -76,000.00
Contributions		$ -99,000.00					$     99,000.00
Benefits						$      85,000.00	$   -85,000.00
Journal Entry for 2017	$ 1,11,000.00	$ -99,000.00	$    -19,000.00	$ 73,000.00	$         -66,000.00
Accumulated OCI,December 31st, 2016			$ 1,00,000.00
Balance on December 31st 2017			$      81,000.00	$ 73,000.00	$      -1,86,000.00	$-7,35,000.00	$ 5,49,000.00
General Journal	Debit	Credit
Pension Expense	111000
Other comprehensive income(G/L)	73000
To Cash		99000
To Other comprehensive income		19000
To Pension Assets/Liability=($11100+$73000-$99000-$19000)		66000
(Being amount of Pension Expense paid in cash   and other comprehensive income arises)