On January 1, 2010, Cunningham Company has the following defined - benefit pensi

Question

On January 1, 2010, Cunningham Company has the following defined - benefit pension plan balances. Projected benefit obligation $4, 500, 000 Fair value of plan assets 4, 200, 000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2011, the company amends is pension agreement so that prior service costs of $500, 000 are created. Other data related to the pension plan are as follows. Prepare a pension worksheet for the pension plan for 2010 and 2011.

Explanation / Answer

x.H> For 2010 Items General Journal Entries Memo Record Annual Pension Expense Cash Prepaid Cost Projected Benefit Plan Assets Balance,1/1/10 4,500,000 Cr. 4,200,000 Dr. Service Cost 150,000 Dr. 150,000 Cr. Actual Return 252,000 Cr. 252,000 Dr. Contributions 240,000 Cr. 240,000 Dr. Benefits 200,000 Dr. 200,000 Cr. Journal Entry for 2010 102,000 Cr. 240,000 Cr. 342,000 Cr. Balance,12/31/10 342,000 Cr. 4,450,000 Cr. 4,492,000 Dr. For 2011 Items General Journal Entries Memo Record Annual Pension Expense Cash Prepaid Cost Projected Benefit Plan Assets Prior Service Cost Balance,12/31/10 342,000 Cr. 4,450,000 Cr. 4,492,000 Dr. Prior Service Cost 500,000 Cr 500,000 Dr Balance,1/1/10

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