Question

On December 31, 2016, Robey Company accumulated the following information for 2016 in regard to its defined benefit pension plan:

Service cost	$110,830
Interest cost on projected benefit obligation	11,470
Expected return on plan assets	10,390
Amortization of prior service cost	2,140

On its December 31, 2015, balance sheet, Robey had reported an accrued/prepaid pension cost liability of $13,000.

Required:

1.	Compute the amount of Robey’s pension expense for 2016.
2.	Prepare all the journal entries related to Robey’s pension plan for 2016 if it funds the pension plan in the amount of (a) $114,050, (b) $113,010, and (c) $118,030.
3.	Next Level Assuming Robey’s beginning 2016 Accumulated Other Comprehensive Income: Prior Service Cost balance was $54,940 what would be its ending balance?
4.	Next Level How much would Robey need to fund its pension plan for 2016 in order to report an accrued/ prepaid pension cost asset of $4,690 at the end of 2016?

Compute the amount of Robey’s pension expense for 2016.

Next Level: Assuming Robey’s beginning 2016 Accumulated Other Comprehensive Income: Prior Service Cost balance was $54,940 what would be its ending balance?

How much would Robey need to fund its pension plan for 2016 in order to report an accrued/ prepaid pension cost asset of $4,690 at the end of 2016?

Answer 1

ANSWER:

Computation of the amount of Robey’s pension expenses 2016

Particulars	Amount
Service cost	110830
Interest cost on projected benefit obligation	11470
Expected return on plan asset	-10390
Amortization of prior service cost	2140
Pension expenses for 2016	114050

Journal entries

	Date	Accounts title &explanation	Debit	Credit
a	2016	Pension expenses	114050
	Dec-31	Cash		114050
	Dec-31	Accrued/prepaid pension cost	2140
		Other comprehensive cost:
		Prior service cost		2140
b	2016	Pension expenses	114050
	Dec-31	Cash		113010
		Accrued/prepaid pension cost		1040
	Dec- 31	Accrued/prepaid pension cost	2140
		Other comprehensive cost:
		Prior service cost		2140
c	2016	Pension expenses	114050
	Dec-31	Accrued/prepaid pension cost	3980
		Cash		118030
	Dec-31	Accrued/prepaid pension cost	2140
		Other comprehensive income:
		Prior service cost		2140

(3)

If robey’s beginning 2016 other comprehensive income: prior service cost balance was 54940 and it amortized 2140 its ending balance would be $52800 (54940-2140)

(4)

Robey had reported a beginning accrued/prepaid pension cost liability of $13000 and reported pension expenses for the period of $114050.In order to report an accrued/prepaid pension cost asset of $4690 at the end of 2016 the company would need to fund during 2016 is $131740 (114050+13000+4690)