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

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

Solutions

Expert Solution

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)

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