The accountant for Neeman Corporation has developed the following information fo

Question

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
Settlement 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, 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

Answer: (a)

Answer (b)

Journal Entry

Projected Benefit Obligation 6000000 Settlement Rate 10% Interest Cost: 6000000*10% 600000 Plan Assets (Fair Value) 4400000 Expected Rate of return on Plan Assets 8% Expected return on Plan Assets: 4400000*8% 352000 Actual Return 420000 Unexpected Gain 68000

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