Problem 20-1 (Part Level Submission) 2014 2015 (a) HARRINGTON COMPANY Pension Wo

Question

Problem 20-1 (Part Level Submission)

2014

2015

(a)

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

Open Show Work

Problem 20-1 (Part Level Submission)

On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.
Projected benefit obligation $4,515,000 Fair value of plan assets 4,206,600
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 $502,100 are created. Other data related to the pension plan are as follows.

2014

2015

Service cost $166,500 $182,100 Prior service cost amortization –0– 95,100 Contributions (funding) to the plan 251,500 305,200 Benefits paid 205,300 286,000 Actual return on plan assets 252,396 273,200 Expected rate of return on assets 6 % 8 %

Explanation / Answer

HARRINGTON COMPANYPension Worksheet—2014 and 2015 items annual pension EXPENSE cash OCI - PRIOR SERVICE COST OCI - GAIN / LOSS PENSION ASSET / LIABILITY PROJECTED BENEFIT OBLIGATION PLAN ASSET BAL JAN 1 ST 2014 3,08,400.00 $4,515,000 42,06,600.00 a. Service cost $166,500 $166,500 b , Interest cost * 4,51,500.00 4,51,500.00 c. Actual return 2,52,396.00 2,52,396.00 d. contributuions 2,51,500.00 2,51,500.00 e. Benefits 2,05,300.00 2,05,300.00 Journal entry, 12/31/14 1,99,104.00 2,51,500.00 1,82,100.00 4927700 45,05,196.00 Accum OCI, 12/31/13 Balance, Dec. 31, 2014 4,22,504.00 49,27,700.00 45,05,196.00 (f) Additional PSC 5,02,100.00 5,02,100.00 January 1, 2015 54,29,800.00 (g) Service cost $182,100 1,82,100.00 (h) Interest cost ** 5,42,980.00 5,42,980.00 i) Actual return 2,73,200 2,73,200.00 (j) Unexpected loss *** 87,215.68 87,215.00 (k) Amortization of PSC 95,100 95,100.00 l) Contributions 3,05,200.00 3,05,200.00 m) Benefits 2,86,000.00 2,86,000.00 Journal entry, 12/31/15 8,24,064.32 3,05,200.00 4,07,000.00 87,215.00 10,13,079.32 Balance, Dec. 31, 2015 4,07,000.00 87,215.00 14,35,583.32 58,68,880.00 47,97,596.00 * 4515000x 10% =415500 ** 5,429800 x 10% = 542980 *** (4505196 x .08)-2273200 = 87215.68

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