The following information is available for the pension plan of Radcliffe Company
ID: 2450063 • Letter: T
Question
The following information is available for the pension plan of Radcliffe Company for the year 2014.
Actual and expected return on plan assets $ 15,000
Benefits paid to retirees 40,000
Contributions (funding) 90,000
Interest/discount rate 10 %
Prior service cost amortization 8,000
Projected benefit obligation, January 1, 2014 500,000
Service cost 60,000
Instructions:
Compute pension expense for the year 2014.
Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014.
Explanation / Answer
Pension Expense Computation for 2014 $ Service Cost 60000 Interest Cost @ 10% on Projected Benefit Obligation 50000 Actual and Expected Return on Planned Assets -15000 Prior Service Cost Amortisation 8000 Pension Expense for 2014 103000 Journal Entry for recording pension expense and employer's contribution to pension plan Pension Expense A/c DR 103000 To Contributions A/c (funded thru cash/bank) 90000 To Accrued Pension Expense Cost A/c 13000
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