Question

On January 1, 2016, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,200,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2016:

Employee	Expected Years of Future Service
A	1
B	3
C	4
D	5
E	5
F	6

Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik’s pension expense, in addition to the amortization of the prior service cost for 2016 and 2017:

	2016	2017
Service cost	$397,300	$567,423
Interest cost on projected benefit obligation	104,100	150,337
Expected return on plan assets	—	90,300

Baznik contributed $772,700 and $875,300 to the pension fund at the end of 2016 and 2017, respectively.

Required:

1.

Next Level Prepare a set of schedules for Baznik to determine (a) the amortization fraction for each year and (b) the amortization of the prior service cost. Prepare a set of schedules for the Baznik Company to determine the amortization fraction for each year. Additional Instruction BAZNIK COMPANY Amortization Fractions 2016 - 2021 1 Employee Expected Years of Future Service Number of Service Years Rendered 2016 Number of Service Years Rendered 2017 Number of Service Years Rendered 2018 Number of Service Years Rendered 2019 Number of Service Years Rendered 2020 Number of Service Years Rendered 2021 2 A 3 B 4 C 5 D 6 E 7 F 8 Total 9 Amortization fraction Prepare a set of schedules for the Baznik Company to determine the amortization of the prior service cost. Additional Instruction BAZNIK COMPANY Prior Service Cost Amortization 2016 - 2021 1 Year Total Prior Service Cost Amortization Fraction Amortization to Increase Pension Expense Remaining Prior Service Cost 2 2016 3 2017 4 2018 5 2019 6 2020 7 2021

2.

Next Level Prepare all the journal entries related to Baznik’s pension plan for 2016 and 2017. GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7

Answer 1

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tat 2 Compat 201 *39+,30o 56R u23 04 100 1So,331 Irtenest cst 249,996 Persio ExPense 子72 5, 300 a SG Debit ) | Gedit(3J endionxpense 47220 cash Palance ss,구00 CTD 1 ension Expere

Daite Lntion expene ราว ,456 1S300 81S6 Cosh cYued penbion