E20-7(Bsic pension worksheet) The following defined pension data of Rydell Corp.
ID: 2476666 • Letter: E
Question
E20-7(Bsic pension worksheet) The following defined pension data of Rydell Corp. apply to the year 2014.
Projected benefit obligation, 1/1/14 (before amendment) 560,000
Plan assets, 1/1/14 546,200
Pension liability 13,800
On January 1, 2014, Rydell Corp., through plan amendment,
grants prior service benefits having a present value of 120,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 65,000
65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2014 17,000
Instruction:
For 2014, prepare a pension worksheet for Rydell Corp that shows the journal entry for pension expense and the year end balance in teh related pension accounts.
Pension Worksheet—2014
General Journal Entries
Memo Record
Items
Annual
Pension
Expense
Cash
OCI - Prior Service Cost
Pension
Asset/
Liability
Projected
Benefit
Obligation
Plan
Assets
Balance, December 31, 2013
(a) Prior service cost
Balance, January 1, 2014
(b) Service cost
(c) Interest cost
(d) Actual return
(e) Amortization of PSC
(f) Contributions
(g) Benefits
Journal entry for 2014
Accumulated OCI, December 31, 2013
Balance, December 31, 2014
Interest cost = $560,000 + $120,000 = $680,000 × Settlement rate of 9% = $61,200.
Projected benefit obligation, 1/1/14 (before amendment) 560,000
Plan assets, 1/1/14 546,200
Pension liability 13,800
On January 1, 2014, Rydell Corp., through plan amendment,
grants prior service benefits having a present value of 120,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 65,000
65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2014 17,000
Instruction:
For 2014, prepare a pension worksheet for Rydell Corp that shows the journal entry for pension expense and the year end balance in teh related pension accounts.
Pension Worksheet—2014
General Journal Entries
Memo Record
Items
Annual
Pension
Expense
Cash
OCI - Prior Service Cost
Pension
Asset/
Liability
Projected
Benefit
Obligation
Plan
Assets
Balance, December 31, 2013
(a) Prior service cost
Balance, January 1, 2014
(b) Service cost
(c) Interest cost
(d) Actual return
(e) Amortization of PSC
(f) Contributions
(g) Benefits
Journal entry for 2014
Accumulated OCI, December 31, 2013
Balance, December 31, 2014
Interest cost = $560,000 + $120,000 = $680,000 × Settlement rate of 9% = $61,200.
Explanation / Answer
Journal entry :
Pension Expense 83,920
OCI-PSC 103,000
To Pensiion Liability 121,920
To Cash 65,000
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