On January 1, 2013, Baznik Company adopted a defined benefit pension plan. At th

Question

On January 1, 2013, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $600,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2013:

EMPLOYEE EXPECTED YEARS OF FUTRUE SERVICE

A 1

B 3

C 4

D 5

E 5

F 6

Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik's pension expense, in addition to the amortization of the prior service cost for 2013 and 2014:

Baznik contributed $411,000 and $415,000 to the pension fund at the end of 2013 and 2014, respectively.

Required:

2. Prepare all the journal entries related to Baznik's pension plan for 2013 and 2014. For a compound transaction, if an amount box does not require an entry, leave it blank.

2013 1/1: OTHER COMPREHENSIVE INCOME: PRIOR SERVICE COST ???

2013 1/1: ACCRUED/PREPAID PENSION ???

DEC 31: PENSION EXPENSE ???

DEC 31: CASH ???

DEC 31: ACCRUED/PREPAID PENSION COST ???

AMORITZE: ACCRUED/PREPAID PENSION COST ???

AMORITZE: OTHER COMPREHENSIVE INCOME: PRIOR SERVICE COST ???

2014 DEC 31 PAYMENT: PENSION EXPENSE ???

2014 DEC 31 PAYMENT: CASH ???

2014 DEC 31 PAYMENT: ACCRUED/PREPAID PENSION COST ???

DEC 31 AMORTIZE: ACCRUED/PREPAID PENSION COST ???

DEC 31 AMORTIZE: OTHER COMPREHENSIVE INCOME: PRIOR SERVICE COST

2013 2014 Service cost $234,000 $253,000 Interest cost on projected benefit obligation 54,000 79,920 Expected return on plan assets — 41,100

Explanation / Answer

a

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