Question

veldre spa proivides the following information about its defined benefit pension plan for te year 2019

service cost 90,000

contribution to the plan 105,000

benefits paid 40,000

plan assets at january 1, 2019 640,000

defined benefit obligation at january 1, 2019 700,000

discount (interest) rate 10%

prepare a pension worksheet inserting january 1, 2019 balances, showing December 31, 2019 balances and the journal entry recording pension expense

Answer 1

a. Computation of Pension Expense for the year 2019
Service cost		$     90,000
Interest cost	(700000*10%)	$     70,000
Expected return on the plan assets	(640000*10%)	$   (64,000)
Amortization of past service cost		$           -
Amortization of net loss		$           -
Pension Expense		$     96,000
b. Pension worksheet
Pension Worksheet-2019
	General Journal Entries						Memo Record
Items	Annual Pension Expense		Cash		Pension Asset/ Liability		Projected Benefit Obligation		Plan Assets
Balance, Jan.1, 2019					$        60,000	Cr.	$           700,000	Cr.	$     640,000	Dr.
Service cost	$           90,000	Dr.					$             90,000	Cr.
Interest cost (700000*10%)	$           70,000	Dr.					$             70,000	Cr.
Actual/Expected return	$           64,000	Cr.							$       64,000	Dr.
Contributions			$     105,000	Cr.					$     105,000	Dr.
Benefits							$             40,000	Dr.	$       40,000	Cr.
Journal entry for 2019	$           96,000	Dr.	$     105,000	Cr.	$          9,000	Dr.
Balance, Dec 31, 2019					$        51,000	Cr.	$           820,000	Cr.	$     769,000	Dr.
c. Journal entry
Account Titles and Explanation	Debit	Credit
Pension Expense	$           96,000
Pension Asset/ Liability	$             9,000
Cash		$   105,000
(To record pension expense)

Feel free to ask any clarification, if required. Please provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.