The following information is available for the pension plan of Radcliffe Company
ID: 2388815 • Letter: T
Question
The following information is available for the pension plan of Radcliffe Company for the year 2012.Actual and expected return on plan assets $15,000
Benefits paid to retirees $40,000
contributions (funding) $90,000
interest/discount rates 10%
prior service cost amortization $8,000
projected benefit obligation, Jan 1, 2012 $500,000
Service cost $60,000
Instructions
a) compute pension expense for the year 2012
b) prepare the journal entries to record pension expense and the employer's contribution to the pension plan in 2012
Explanation / Answer
(a) Computation of pension expense: Service cost .............................................................. $ 60,000 Interest cost ($500,000 X .10).............................. 50,000 Expected return on plan assets ......................... (15,000) Prior service cost amortization .......................... 8,000 Pension expense for 2010.................................... $103,000 (b) Pension Expense .............................................................. 103,000 Cash ............................................................................. 90,000 Pension Asset /Liability.......................................... 5,000 Other Comprehensive Income (PSC) ................ 8,000
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