In: Accounting
Metlock Company provides the following selected information
related to its defined benefit pension plan for 2017.
Compute pension expense.
Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017. Preparation of a pension worksheet is not required. Benefits paid in 2017 were $37,500
Pension asset/liability (January 1) | $23,100 | Cr. | |
Accumulated benefit obligation (December 31) | 402,800 | ||
Actual and expected return on plan assets | 10,800 | ||
Contributions (funding) in 2017 | 149,300 | ||
Fair value of plan assets (December 31) | 805,500 | ||
Settlement rate | 10 | % | |
Projected benefit obligation (January 1) | 706,000 | ||
Service cost |
80,550 |
Computation of Pension Expense | |
Particular | Amount ( $) |
Service Cost | 80,550 |
Benefit Obligation ($706000X 10%) | 70,600 |
Less: Return on Planned Asset | -10,800 |
Pension Expense | 1,40,350 |
Journal Entry | ||
Account Tittle | Debit | Credit |
Pension Expense | 1,40,350 | |
Pension Asset/ Lability(bal Fig) | 8,950 | |
Cash | 1,49,300 |