P20-8 (Comprehensive 2-Year Worksheet) Glesen Company sponsors a defined benefit
ID: 2348406 • Letter: P
Question
P20-8 (Comprehensive 2-Year Worksheet) Glesen Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2008 and 2009.2008 2009
Projected benefit obligation, January 1 $650,000
Plan assets (fair value and market related value), Jan. 1 410,000
Prepaid/accrued pension cost (credit), January 1 80,000
Additional pension liability, January 1 12,300
Intangible asset-deferred pension cost, January 1 12,300
Unrecognized prior service cost, January 1 160,000
Service cost 40,000 $ 59,000
Settlement rate 10% 10%
Expected rate of return 10% 10%
Actual return on plan assets 36,000 61,000
Amortization of prior service cost 70,000 55,000
Annual contributions 72,000 81,000
Benefits paid retirees 31,500 54,000
Increase in projected benefit obligation due to
changes in actuarial assumptions 87,000 –0–
Accumulated benefit obligation at December 31 721,800 789,000
Average service life of all employees 20 years
Vested benefit obligation at December 31 464,000
Instructions
(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.
Explanation / Answer
(b) 2010 Dr Cr
Pension expenses $173,500
Cash $72,000
Amortization
PSC $70,000
Pension asset $31,500
2011
Pension expenses $190,000
Cash $81,000
Amortization
PSC $55,000
Pension asset $54,000
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