Question

Springfield Power Plant provides the following information about its defined benefit pension plan for the year 2018. Account balances as of 1/1/2018 Projected benefit obligation Plan assets Pension liability Prior Service Cost AOCI Net Loss AOC Facts for 2018 Settlement (Discount) rate and expected rate of return Service cost Contributions Actual return on plan assets Benefits paid to retirees Prior service cost amortization 290,000 234,000 56,000 18,000 33,500 10% 17,500 37,000 22,000 18,000 9,600 20 years Average service life of all covered employees Prepare a pension worksheet for Springfield power plant that shows Using the worksheet on the next page, complete the worksheet and then use the information to prepare the journal entry for pension expense a. Account DR CR b. What would be the ending balance in the following accounts a. Plan Assets b. PBO c. Prior Service Cost-AOCI

Answer 1

Answer

Amortization of net gain or loss-AOCI using Corridor approach Pension Work Sheet Current Year General Journal Entries Memo Record sign indicates Credits Debits Positive Sign Indicates OCI -Prion Annual Pension Projected Benefit oci Gain JLoss Items Cash Cost Asset'Liability ation Plan assets 234,000 Dr Balance, Jan. 1, 2018 Service cost Interest cost l settlement rate PBO x 10% Actual Return Unexpected Loss Ngair Amortisation of Past service cost Amortlzation of net gain or loss-AOci Contributions (56,000) Cr 17,500 Dr 29,000Dr 000 Cr (290,000) Cr (17,500) Cr. 29,000) Cr 22,000 Dr Dr. 9,600 Dr 225 Dr (9,600) 225) Cr 37,000) Cr 37.000 Dr 18,000 Dr Dr. (18,000) Cr Decreaselincrease in PBO-(actuarial Cr. Cr 33,600 Dr 33,276 Dr for 2018 325 Dr Cr 12,500 Dr Accumulated OCI, 1 Jan 18 Balance Dec. 2018 600) Cr 18,000 Dr 8,400 Dr (43,600) Cr (318,500) Cr. 276,000 Dr Comdo Projected Benefit Minimum amortization of galn or Loss Year Plan assets | Corridor@10% Cumulative Unrecognized Gain or loss Current Year 290,000 33.600 225.00 Loss 20

Pension Expense 34,325 1, Journal entry (or entries) to record all pension effects for 2018 Account title & explanation Debit credit Pension expense Pension AssetI Liabili Other comprehensive income(G/L) Cash Other comprehensive income(PSC) 34,325 12,500 225 37,000 9,600 Record the journal entry for pension expense for 2018 Pension Expense Plann Assets Amortisation of net loss-OCI Amortisation of Prior service cost-OCI PBO 34,325 22,000 225 9,600 46,500 Record the journal entry for cash contribution to plan assets for 2018 Plan Assets Cash 37,000 37,000 Record the journal entry for benefits paid to employees for 2018 РВО Plan Assets 18,000 18,000 Answer b Ending Balances Plan Assets РВО Prior service cost AOCI 275,000 318,500 8,400