In: Finance
(L.O. 2 and 3) On January 1, 2017 Bengston Company amended its pension plan to provide greater benefits to its employees. The amendment to the plan resulted in prior service costs with a present value of $90,000. Also, the following facts relate to the pension plan for 2017
Projected benefit obligation, 12/31/16 $175,000
Plan assets, 12/31/16 171,000
Prior service cost, 1/1/17 90,000
Annual service cost, 2017 18,000
Settlement rate, 2017 12%
Actual return on plan assets 18,500
Employer’s contribution, 2017 42,000
Benefits paid to retirees, 2017 12,000
Balance in pension asset/liability, 12/31/16 4,000
Amortization of prior service cost using the yearsofservice
method 23,800
Instructions:
a. Based upon the information presented above prepare a pension worksheet for Bengston Company for 2017.
b.Record the journal entry to formally recognize the pension expense for 2017.
c.Prepare the reconciliation schedule for December 31, 2017.