A partially completed pension spreadsheet showing the relationships among the el

Question

A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc., defined benefit pension plan follows. Six years earlier, Carney revised its pension formula and recalculated benefits earned by employees in prior years using the more generous formula. The prior service cost created by the recalculation is being amortized at the rate of $6 million per year. At the end of 2018, the pension formula was amended again, creating an additional prior service cost of $40 million. The expected rate of return on assets and the actuary’s discount rate were 10%, and the average remaining service life of the active employee group is 10 years.

Required:

1. Fill in the missing amounts.
2. to 4. Prepare all the necessary journal entries for 2018            

Fill in the missing amounts. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Enter credit amounts with a minus sign and debit amounts with a positive sign.)

Prepare all the necessary journal entries for 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Journal entry worksheet

Transaction Index :

Record pension expense.

Record any 2018 gains and losses.

Record new prior service cost in 2018.

Record the cash contribution to plan assets.

Record payment of retiree benefits.

Note: Enter debits before credits.

+

Explanation / Answer

$ in millions PBO Plan Assets Prior Service Cost - AOCI Net Loss - AOCI Pension Expenses Cash Net pension (liability) / Asset Balance, Jan 1, 2018 -$970 $870 $25 $107 -$100 Service Cost -$98 $98 -$98 InterestCost -$97 $97 -$97 Expensted return on assets $87 -$87 $87 Adjust for: Loss on assets -$6 $6 -$6 Amortization of: Prior Service cost -$6 $6 Net Loss -$1 -$1 loss on PBO -$27 27 -$27 Prior Service cost -$40 $40 -$40 Cash Funding $116 -$116 $116 Retiree benefits $262 -$262 Balance, Dec 31, 2018 -$970 $805 $59 $139 $113 -$116 -$165 Corridor Amortization $1 ($107-$970*10%)/10 event General journal debit Credit 1 record pension expense Pension expenses $115 Plan Asset $87 To PBO $195 To Net loss - AOCI $1 To Prior service cost - AOCI $6 (Being Pension expense recorded) 2 record gain/losses Net Loss - AOCI $33 To Plan Assets $6 To PBO $27 (Being loss recorded) 3 Record new prior service cost Prior service cost - AOCI $40 To PBO $40 (Being prior service cost recorded) 4 Record cash contribution Paln asset $116 to cash $116 (being cash contribution recordeed) 5 record payment to retiree PBO $262 To olan assets $262 (Being payment to retiree recorded)

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