2017 2018 (a) Prepare a pension worksheet for the pension plan for 2017 and 2018
ID: 2584122 • Letter: 2
Question
2017
2018
(a)
Prepare a pension worksheet for the pension plan for 2017 and 2018. (Enter all amounts as positive.)
On January 1, 2017, Skysong Company has the following defined benefit pension plan balances.Projected benefit obligation $4,585,000 Fair value of plan assets 4,190,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2018, the company amends its pension agreement so that prior service costs of $505,000 are created. Other data related to the pension plan are as follows.
2017
2018
Service cost $151,000 $178,000 Prior service cost amortization 0 92,000 Contributions (funding) to the plan 245,000 284,000 Benefits paid 204,000 274,000 Actual return on plan assets 251,400 260,000 Expected rate of return on assets 6 % 8 %Explanation / Answer
Items Annual pension expense Cash OCI-PSC OCI-Gain/loss Pension asset/liability Projected benefit obligation Plan assets Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Balance Jan 1.2017 395000 Cr 4585000 Cr 4190000 Dr Service cost 151000 Dr 151000 Cr 151000 Cr Interest cost 458500 Dr 458500 Cr 458500 Cr Actual return 251400 Cr 251400 Dr 251400 Dr Contributions 245000 Cr 245000 Dr 245000 Dr Benefits 204000 Dr 204000 Cr Jounal entry for 2017 Jounal entry for 2017 358100 Dr 245000 Cr 0 0 113100 Cr Accummulated OCT dec 31.2016 0 Balance Dec 31.2017 508100 Cr 4990500 Cr 4482400 Dr Additional PSC 1 1 2018 505000 Dr 505000 Cr 505000 Cr Balance Jan 1 2018 508100 Cr 4990500 Cr 4482400 Dr Service cost 178000 Dr 178000 Cr 178000 Cr Interest cost 499050 Dr 499050 Cr 499050 Cr Actual return 358592 Cr 98592 Dr 260000 Dr 260000 Dr Unexpected loss Amortisation of PSC 92000 Dr 92000 Cr Contributions 284000 Cr 284000 Dr 284000 Dr Benefits 274000 Dr 274000 Cr Journal entry for 2018 410458 Dr 284000 Cr 413000 Dr 98592 Dr 638050 Cr Accumulated OCI Dec.31 2017 0 0 Balance Dec 31 2018 413000 Dr 98592 Dr 1146150 Cr 5898550 Cr 4752400 Dr
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