6. The accountant for Neeman Corporation has developed the following information
ID: 2484482 • Letter: 6
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
All amount in $ Items Annual Pension Expense Cash OCI - Prior Service Cost OCI - Gain/Loss Pension Asset/Liability Projected Benefit Obligation Plan Assets 10,00,000 -16,00,000 -60,00,000 44,00,000 Service Cost 8,00,000 -8,00,000 Expected Return -3,52,000 -68,000 4,20,000 Interest Cost 6,00,000 -6,00,000 Aort. PSC 1,68,000 -1,68,000 Contributions -4,04,000 4,04,000 Benefit Paid 69,000 -69,000 Journal Entry 12,16,000 -4,04,000 -1,68,000 -68,000 -5,76,000 21,76,000 -73,31,000 51,55,000
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