Question

In: Accounting

The following information is provided to you from Elgin Outboard Motor Company and their pension administration...

The following information is provided to you from Elgin Outboard
Motor Company and their pension administration firm:
Service Cost . . . . . . . . . . . . . . . . . . $81,650
Contribution to plan . . . . . . . . . . . . . . 162,300
Prior Service Cost Amortization. . . . . . . . . 3,600
Actual and Expected Return on Assets . . . . . . 88,650
Benefits Paid. . . . . . . . . . . . . . . . . . 48,000  
Plan Assets, January 1, 2017 . . . . . . . . . . 877,445
Projected Benefit Obligation, January 1, 2017. . 897,000
Interest/Discount (settlement) rate. . . . . . . 7%
Accumulated OCI (PSC), January 1, 2017 . . . . . 36,000
Required
Complete the pension worksheet below for 2017, and prepare the
necessary journal entry at December 31, 2017.

Solutions

Expert Solution

Ans- Pension Worksheet

Journal Entries Memo Record
Items Annual Pension Expenses ($) Cash ($) OCI-Prior service cost ($) Pension Asset/ Liability Projected benefit obligation ($) Plan Assets ($)
Balance January 1,2017 19,555 Cr. 897,000 Cr. 877,445 Dr.
Prior Service Cost 36,000 Dr. 36,000 Cr.
Amortize Prior Service Cost 3,600 Dr. 3,600 Cr.
Annual Service Cost 81,650 Dr. 81,650 Cr.
Interest Cost ($897,000*7/100) 62,790 Dr. 62,790 Cr.
Actual Return 88,650 Cr. 88,650 Dr.
Unexpected loss
Contribution 162,300 Cr. 162,300 Dr.
Banefits paid 48,000 Dr. 48,000 Cr.
Journal entry for 2017 59,390 Dr. 162,300 Cr. 50,955 Dr.
Accumulated OCI- December 31,2016 32,400 Dr.
Ending Balance December 31,2017 31,400 Dr. 1,029,440 Cr. 1,080,395 Dr.

Journal entry:-

December 31,2017 Pension Expenses A/c Dr. $59,390
OCI A/c Dr. 32,400
Pension asset/ liability A/c Dr. 31,400
Cash A/c 162,300
Other Comprehensive Income Gain/Loss 39,110

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