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Interest (Cost) Rate Expected rate of return on plan assets Actual rate of return on plan...

Question:

Interest (Cost) Rate Expected rate of return on plan assets Actual rate of return on plan assets Beginning of year balance in
Record the above transactions and events in a worksheet: PROJECTED BENEFIT OBLIGATION RECORDED IN THE ACCOUNTS Prior Service
Interest (Cost) Rate Expected rate of return on plan assets Actual rate of return on plan assets Beginning of year balance in CASH 3% 3% 4% $ 120,000 $ 40,000 Projected benefit obligation at the beginning of 2017 Service cost, 2017 Interest Cost Loss (gain) on PBO for assumption changes Less: Benefits paid to retirees during the year $ 3,500 (45,000) Projected benefit obligation at the end of 2017 $ 250,000 Plan assets at the beginning of the year Actual return on plan assets Cash contributions to the pension plan in 2017 Less: Benefits paid to retirees during the year 44,000 Plan assets at the end of 2017 Additional information reported from the actuary and plan trustee: $ $ Prior Service Costs incurred beginning of 2016 Beginning of year balance in AOCI for Net Loss Average remaining service years of employees Beginning of year balance in AOCI for PSC Amortization of PSC Amortization of net loss Expected return on plan assets 40,000 43,750 4 years 30,000 $
Record the above transactions and events in a worksheet: PROJECTED BENEFIT OBLIGATION RECORDED IN THE ACCOUNTS Prior Service NET Cost- LOSSI[GAIN) AOCI -AOCI REPORTED ONLY PENSION ASSET LIABILITY ANNUAL PENSION EXPENSE PLAN ASSET CASH ITEM

Answers

Pension Worksheet- 2017
Memo Record General Journal Entries
PROJECTED BENEFIT OBLIGATION PLAN ASSET Prior Service Cost-AOCI Net Loss (Gain)-AOCI Annual Pension Expense Cash Pension Asset/ Liability
Balance, Jan 1, 2017 $      (350,000) $   250,000 $     30,000 $       43,750 $                (100,000)
Service cost $        (40,000) $ 40,000 $                  (40,000)
Interest cost,3% (350000*3%) $        (10,500) $ 10,500 $                  (10,500)
Expected return on assets (250000*3%) $      7,500 $ (7,500) $                     7,500
Adjust for: $                          -  
Gain on assets (250000*4%=10000-7500) $      2,500 $        (2,500) $                     2,500
Loss on PBO for assumption changes $          (3,500) $         3,500 $                   (3,500)
Amortization of Prior Service Cost (40000/4) $    (10,000) $ 10,000 $                          -  
Amortization of Net Loss $        (2,188) $ 2,188 $                          -  
Contributions $     44,000 $ (44,000) $                   44,000
Retiree Benefits $         45,000 $   (45,000) $                          -  
Balance, Dec 31, 2017 $      (359,000) $   259,000 $     20,000 $       42,563 $ 55,188 $ (44,000) $                (100,000)
Computation of unexpected loss/(gain) on assets for the year 2017:-
Expected return on the plan assets (250000*3%) $               7,500
Less: Actual return on the plan assets (250000*4%) $             10,000
Unexpected loss/(gain) on plan assets for 2017 $             (2,500)
Computation of amount of loss to be amortized from OCI-loss Account in current year:-
a. Net loss-AOCI beginning $       43,750
Projected Benefit Obligation, beginning $    350,000
Plan Assets, beginning $    250,000
Higher value $    350,000
b. Corridor =10% of $350000 $       35,000
c. Excess at the beginning of the year (a-b) $8,750
d. Average remaining service period 4 years
e.

Loss amortized to current year pension expense (c/d)

$2,188
Computation of Pension Expense for the Current year:-
Service cost $     40,000
Interest cost $     10,500
Expected return on the plan assets $     (7,500)
Amortization of past service cost $     10,000
Amortization of net loss $      2,188
Pension Expense $     55,188
Journal entry
Account Titles and Explanation Debit Credit
Pension Expense $         55,188
         Cash $     44,000
         OCI-PSC $     10,000
         OCI - loss $      1,188
(To record pension expense)

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