Question

1. Look Ahead Co. has a defined benefit pension plan that was put into place five years ago. Specific balances and assumptions as of December 31, 2019 are shown in the table below.  The expected return on plan assets was 12%.

PBO, 1/1/2019                      4,100,000

Service costs                           954,000

Interest costs (6%)                 246,000

Payments to retirees           (1,000,000)

PBO, 12/31/2019                 4,300,000

Plan assets, 1/1/2019         4,000,000

Actual return                            450,000

Cash contribution                    800,000

Payments to retirees           (1,000,000)

Plan assets, 12/31/2019     4,250,000

1. Calculate pension expense for 2019
2. Prepare all the necessary journal entries at the end of 12/31/2019

	DEBIT	CREDIT

3. What is the balance in the Prepaid/Accrued Pension Cost account at the end of December 31, 2019?  Indicate the amount and whether it is on the DEBIT or CREDIT side.

Answer 1

Ans A
Pension Expense For Year 2019
Service costs	9,54,000
Interest costs (6%)	2,46,000
Expected Return Of Planned Assets @ 12%	-4,50,000
	7,50,000
Ans B
Journal entries at the end of 12/31/2019
	DEBIT	CREDIT
Pension Expense	7,50,000
Pension Liability		7,50,000
For pension expense
PBO, 12/31/2019	43,00,000
Cash		43,00,000
Plan assets, 12/31/2019	42,50,000
Cash		42,50,000
Ans C
7,50,000 is Prepaid/Accrued Pension Cost account at the end of December 31, 2019?