6. The accountant for Neeman Corporation has developed the following information

Question

6. The accountant for Neeman Corporation has developed the following information for the company's defined benefit pension plan for 2014: Service cost $800,000 Actual return on plan assets 420,000 Annual contribution to the plan 404,000 Amortization of unrecognized prior service cost 168,000 Benefits paid to retirees 69,000 Discount rate 10% Expected rate of return on plan assets 8% The beginning balances at 1/1/2014 of some of the memo accounts are: Projected Benefit Obligation: ($6,000,000) Plan Assets: $4,400,000 Unrecognized Prior Service Costs: $1,000,000

REQUIRED:

(a) Using the above information for Neeman Corporation, complete a pension work sheet for 2014. Indicate (credit) entries by parentheses. Calculated amounts should be supported.

(b) Prepare the journal entries to reflect the accounting for the company's pension plan for the year ending December 31, 2014.

Explanation / Answer

Neeman Corporation Service cost 800000 Contribution to the plan 404000 Actual & Expected return on plan assets 420000 Prior service cost amortization 168000 Benefit paid to retirees 69000 Plan Assets at 1/1/2014 4400000 Projected benefit obligation at 1/1/2014 6000000 Accumulated OCI PSC at 1/1/2014 1000000 Interest /discount (Settlement ) rate 10% 10% Expected Rate of Return 8% General Journal Entries Memo Recods Item Pension Expense Cash Pension Assets/Liability Prior service cost Projected benefit obligation Plan Assets Jan,1 2010 $                      (600,000.00) $        1,000,000.00 $(6,000,000.00) $   4,400,000.00 Service Cost $          800,000.00 $    (800,000.00) Interest Expense $          600,000.00 $    (600,000.00) Interest Revenue $        (420,000.00) $      420,000.00 Assets gain or loss $             68,000.00 $      (68,000.00) Contributions $ (1,404,000.00) $   1,404,000.00 Benefit Paid $         69,000.00 $      (69,000.00) Prior service cost amortization $          168,000.00 $         (168,000.00) Journal Entry Dec 31,2014 $       1,216,000.00 $ (1,404,000.00) $                        188,000.00 $           832,000.00 $(7,331,000.00) $   6,087,000.00 Balance Dec 31st 2014 $                      (412,000.00) $         (412,000.00) Journal Entry Recording Expense Particular Amount(DR) Amount (CR) Pension Expense $       1,216,000.00     Pension Liability $          188,000.00                 Cash $    1,404,000.00 Total $       1,404,000.00 $    1,404,000.00

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