Question

Question 3 --/1 View Policies Current Attempt in Progress Sheridan Company received the following selected information from its pension plan trustee concerning the operation of the company's defined benefit pension plan for the year ended December 31, 2020. Projected benefit obligation Market-related and fair value of plan assets Accumulated benefit obligation Accumulated OCI (G/L)-Net gain January 1, 2020 December 31, 2020 $1,508,000 $1,537,000 807,000 1,138,700 1,581,000 1,702,800 (200,800) The service cost component of pension expense for employee services rendered in the current year amounted to $79,000 and the amortization of prior service cost was $121,800. The company's actual funding (contributions) of the plan in 2020 amounted to $251,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,218,000 on January 1, 2020. Assume no benefits paid in 2020.

Answer 1

	Sheridan Company
a)	Service cost	$       79,000.00
	Interest on project benefit obligation($1508000*10%)	$    1,50,800.00
	Expected return on plan assets($807000*10%)	$      -80,700.00
	Amortization of prior service cost	$    1,21,800.00
	Pension Expense	$    2,70,900.00
b)	General,Journal	Debit	Credit
	Pension Expense	$    2,70,900.00
	Pension Assets/Liability (balancing figure)=($121800+$200800+$251000-$270900)	$    3,02,700.00
	To Other comprehensive income-Prior service cost		$    1,21,800.00
	To Other comprehensive income-(G/L)		$    2,00,800.00
	To Cash		$    2,51,000.00
	(Amount of Pension expense & contribution)
c)	Sheridan Company
	Income Statement
	Pension Expense		$    2,70,900.00
	Comprehensive Income statement
	Net Income		****
	Other comprehensive income/loss
	Amortization of prior service cost	$    1,21,800.00
	Liability gain	$    2,00,800.00	$    3,22,600.00
	Comprehensive Income		*****
	Sheridan Company
d)	Balance Sheet(Partial)
	Liabilities
	Pension Liability(Project benefit obligation-fair value of plan assets)=($1537000-$1138700)		$    3,98,300.00
	Stockholder's Equity
	Accumulated OCI (Prior service cost)=($1218000-$121800)		$ 10,96,200.00
	Accumulated OCI (G/L)		$    2,00,800.00