Question

Can you solve B only

Problem 20-3 (Part Level Submission)

Kingbird Company sponsors a defined benefit plan for its 100 employees. On January 1, 2017, the company’s actuary provided the following information.

Accumulated other comprehensive loss (PSC)                    $149,300

Pension plan assets (fair value and market-related asset value)                 197,200

Accumulated benefit obligation                                255,900

Projected benefit obligation                       387,500

The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2017, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to $51,000; the projected benefit obligation was $487,000; fair value of pension assets was $279,200; the accumulated benefit obligation amounted to $360,700. The expected return on plan assets and the discount rate on the projected benefit obligation were both 10%. The actual return on plan assets is $11,400. The company’s current year’s contribution to the pension plan amounted to $70,600. No benefits were paid during the year.               

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(a) Determine the components of pension expense that the company would recognize in 2017. (With only one year involved, you need not prepare a worksheet.) (Enter amounts that reduce pension expense with either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

Components of Pension Expense

Actual Return on Plan AssetsAmortization of Gain or LossAmortization of Prior Service CostBenefits PaidContributions to PlanExpected Return on Plan AssetsInterest on Projected Benefit ObligationService CostUnexpected LossPension Expense

Actual Return on Plan AssetsAmortization of Gain or LossAmortization of Prior Service CostBenefits PaidContributions to PlanExpected Return on Plan AssetsInterest on Projected Benefit ObligationService CostUnexpected LossPension Expense

Actual Return on Plan AssetsAmortization of Gain or LossAmortization of Prior Service CostBenefits PaidContributions to PlanExpected Return on Plan AssetsInterest on Projected Benefit ObligationService CostUnexpected LossPension Expense

Actual Return on Plan AssetsAmortization of Gain or LossAmortization of Prior Service CostBenefits PaidContributions to PlanExpected Return on Plan AssetsInterest on Projected Benefit ObligationService CostUnexpected LossPension Expense

Actual Return on Plan AssetsAmortization of Gain or LossAmortization of Prior Service CostBenefits PaidContributions to PlanExpected Return on Plan AssetsInterest on Projected Benefit ObligationService CostUnexpected LossPension Expense

Actual Return on Plan AssetsAmortization of Gain or LossAmortization of Prior Service CostBenefits PaidContributions to PlanExpected Return on Plan AssetsInterest on Projected Benefit ObligationService CostUnexpected LossPension Expense

    Actual Return on Plan Assets    Amortization of Gain or Loss    Amortization of Prior Service Cost    Benefits Paid    Contributions to Plan    Expected Return on Plan Assets    Interest on Projected Benefit Obligation    Service Cost    Unexpected Loss    Pension Expense

(b)Prepare the journal entry to record the pension expense and the company’s funding of the pension plan in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

	Kingbird Company
	On Jan 1,2017
	Pension Plan Assets(Fair Value and market related assets value)	$ 1,97,200.00
	Accumulated benefit obligation	$ 2,55,900.00
	Prjected Benefit Obligation	$ 3,87,500.00
	On 31st Dec 2017
	Present Value of future benefit earned for employees services rendered in current year	$     51,000.00
	The Project benefit obligation	$ 4,87,000.00
	Fair value of Pension Assets	$ 2,79,200.00
	The accumulated benefit obligation	$ 3,60,700.00
	The Discount(Interest Rate)	0.1
	The Actual Return on Plan Assets	$     11,400.00
	Current Year contribution to pension plan	$     70,600.00
a)	Pension Expense for 2017
	Service Cost	$     51,000.00
	Interest on defined benefit obligation($387500*10%)	$     38,750.00
	Interest Revenue($197200*10%)	$   -19,720.00
	Pension Expense for 2017	$     70,030.00
	Journal Entries
	Particular	Amt (Dr)	Amt (Cr)
b)	Other comprehensive Income(G/L)	$     18,070.00
	Pension Expense	$     70,030.00
	To Cash(Current year contribution to pension plan)		$       70,600.00
	To Pension Assets/Liability		$       17,500.00
c )	2017 Increase/Decrease in Gains /Losses
	On 31st Dec 2017,Actuary computes defined benefit obligation		$   4,87,000.00
	Less:
	Project benefit obligation	$ 3,87,500.00
	Add: Interest ($387500*10%)	$     38,750.00
	Add: Service Cost(given)	$     51,000.00
	Less: Benefit Paid	$                    -	$ -4,77,250.00
	Liability loss=($487000-$477250)		$         9,750.00
	Fair Value of Plan Assets on December 31st 2017		$   2,79,200.00
	Less:
	Expected fair value on Jan1,2017	$ 1,97,200.00
	Add: Interest Revenue($197200*10%)	$     19,720.00
	Add: Pension Plan contribution	$     70,600.00
	Less: Benefit payments	$                    -
	Total		$ -2,87,520.00
	Assets loss		$       -8,320.00
	Net loss=(Liability loss+Assets loss)=($9750+$8320)		$       18,070.00