Presented below is information related to Jones Department Store pension plan fo
ID: 2346762 • Letter: P
Question
Presented below is information related to Jones Department Store pension plan for 2013.Accumulated benefits obligation (at year-end) $600,000
Service cost 520,000
Funding contribution for 2013 480,000
Settlement rate used in actuarial computation 10%
Expected retrun on plan assets 9%
Amortization of PSC (at beginning of period) 100,000
Amortization of net gains 48,000
Projected benefit obligation (at beginning of period) 450,000
Fair value of plan asset (at beginning of period) 360,000
a) Compute the amount of pension expense to be reported for 2013. (show computations)
b) Prepare the journal entry to record pension expense and the employer's contribution for 2013.
Explanation / Answer
SERVICE COST
$520,000
INTEREST ON PROJECTTED BENEFIT OBLIGATION(480,000 X 10%)
48,000
EXPECTED RETURN (360,000 X 9%)
(32,400)
AMORTIZATION OF PSC
100,000
AMORTIZATION NET GAINS
(48,000)
PENSION EXPENSE
587,600
PENSION EXPENSE
587,600
OTHER COMPHRENSIVE INCOME
48,000
CASH
500,000
OTHER COMPHRENSIVE INCOME
100,000
PENSION ASSEST /LIABILITY
35,600
SERVICE COST
$520,000
INTEREST ON PROJECTTED BENEFIT OBLIGATION(480,000 X 10%)
48,000
EXPECTED RETURN (360,000 X 9%)
(32,400)
AMORTIZATION OF PSC
100,000
AMORTIZATION NET GAINS
(48,000)
PENSION EXPENSE
587,600
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