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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