Pension data for Barry Financial Services Inc. include the following: Required:

Question

Pension data for Barry Financial Services Inc. include the following:

Required:
1. Determine pension expense for 2018.
2. Prepare the journal entries to record pension expense, gains and losses (if any), funding, and retiree benefits for 2018.

($ in 000s) Discount rate, 7% Expected return on plan assets, 12% Actual return on plan assets, 11% Service cost, 2018 $ 420 January 1, 2018: Projected benefit obligation 2,850 Accumulated benefit obligation 2,550 Plan assets (fair value) 2,950 Prior service cost–AOCI (2018 amortization, $50) 380 Net gain–AOCI (2018 amortization, $10) 440 There were no changes in actuarial assumptions. December 31, 2018: Cash contributions to pension fund, December 31, 2018 355 Benefit payments to retirees, December 31, 2018 380

Explanation / Answer

Service Cost = 430

Interest Cost = Discount Rate*Projected Benefit Obligation = 7%*2900 = 203

Expected Return on the Plan Assets = Plan Assets*Actual Return on Plan Assets + Loss Arising Out of the Difference between Actual and Planned Return = 3000*12% + 3000*(13%-12%) = (390)

Amortization of Prior Service Cost = 25

Amortization of Net Gain = (10)

Pension Expense = 430 + 203 - 390 + 25 - 10 = $258 or $258000 (if expressed in thousands)

Answer is $258 or $258000 (if expressed in thousands).

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