2014 2015 HARRINGTON COMPANY Pension Worksheet—2014 and 2015 General Journal Ent

Question

2014

2015

HARRINGTON COMPANY
Pension Worksheet—2014 and 2015

General Journal Entries

Memo Record

Annual Pension
Expense

Cash

OCI—Prior
Service Cost

OCI—Gain/
Loss

Pension Asset/
Liability

Projected Benefit
Obligation

Plan
Assets

On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.
Projected benefit obligation $4,507,000 Fair value of plan assets 4,204,600
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its pension agreement so that prior service costs of $519,700 are created. Other data related to the pension plan are as follows.

2014

2015

Service cost $169,500 $199,300 Prior service cost amortization –0– 95,300 Contributions (funding) to the plan 260,400 294,900 Benefits paid 211,800 291,600 Actual return on plan assets 252,276 267,000 Expected rate of return on assets 6 % 8 %

Explanation / Answer

The completed pension worksheet is provided as below:

HARRINGTON COMPANY Pension Worksheet – 2012 and 2013 General Journal Entries Memo Record Items Annual
Pension
Expense Cash OCI - Prior Service Cost OCI - Gain/Loss Pension
Asset/
Liability Projected
Benefit
Obligation Plan
Assets Balance, Jan. 1, 2014 302,400 Cr. 4,507,000 Cr. 4,204,600 Dr. Service cost 169,500 Dr. 169,500 Cr. Interest cost (4,507,000*10%) 450,700 Dr. 450,700 Cr. Actual return 252,276 Cr. 252,276 Dr. Contributions 260,400 Cr. 260,400 Dr. Benefits 211,800 Dr. 211,800 Cr. Journal entry for 2014 367,924 Dr. 260,400 Cr. 107,524 Cr. Accumulated OCI, Dec.31, 2013 Balance, Dec. 31, 2014 409,924 Cr. 4,915,400 Cr. 4,505,476 Dr. Additional PSC, 1/1/2015 519,700 Dr. 519,700 Cr. Balance January 1, 2015 5,435,100 Cr. Service cost 199,300 Dr. 199,300 Cr. Interest cost (5,435,100*10%) 543,510 Dr. 543,510 Cr. Actual return 267,000 Cr. 267,000 Dr. Unexpected loss (4,505,476*8% - 267,000) 93,438 Cr. 93,438 Dr. Amortization of PSC 95,300 Dr. 95,300 Cr. Contributions 294,900 Cr. 294,900 Dr. Benefits 291,600 Dr. 291,600 Cr. Journal Entry for 2015 477,672 Dr. 294,900 Cr. 424,400 Dr. 93,438 Dr. 700,610 Cr. Accumulated OCI, Dec.31, 2014 Balance, Dec. 31, 2015 424,400 Dr. 93,438 Dr. 1,110,534 Cr. 5,886,310 Cr. 4,775,776 Dr.

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