Question

Exercise 20-11 (Part Level Submission) Sage Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2017 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2017 amounted to $55,700. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $144,323 for 2017. 3. As of January 1, 2017, the company had a projected benefit obligation of $894,700, an accumulated benefit obligation of $792,500, and a debit balance of $402,000 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $601,400 at the beginning of the year. The actual and expected return on plan assets was $54,300. The settlement rate was 9%. No gains or losses occurred in 2017 and no benefits were paid. 4. Amortization of prior service cost was $49,800 in 2017. Amortization of net gain or loss was not required in 2017. Collapse question part (a) Correct answer. Your answer is correct. Determine the amounts of the components of pension expense that should be recognized by the company in 2017. (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 Entry field with correct answer $Entry field with correct answer 55700 Entry field with correct answer Entry field with correct answer 80523 Entry field with correct answer Entry field with correct answer -54300 Entry field with correct answer Entry field with correct answer 49800 Entry field with correct answer $Entry field with correct answer 131723 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT Attempts: 1 of 3 used Collapse question part (b) Correct answer. Your answer is correct. Prepare the journal entry or entries to record pension expense and the employer’s contribution to the pension trustee 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.) Account Titles and Explanation Debit Credit Entry field with correct answer Pension Expense Entry field with correct answer 131723 Entry field with correct answer Entry field with correct answer Pension Asset/Liability Entry field with correct answer 62400 Entry field with correct answer Entry field with correct answer Cash Entry field with correct answer Entry field with correct answer 144323 Entry field with correct answer Other Comprehensive Income (PSC) Entry field with correct answer Entry field with correct answer 49800 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT Attempts: 2 of 3 used Collapse question part (c) Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Sage Company for the year 2017. Sage Company Income Statement (Partial) $ Sage Company Comprehensive Income Statement $XXXX $XXXX Sage Company Balance Sheet (Partial) $ $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

The answers are given below.Thanks

a)Pension expense for 2017
Components of Pension expense
Service cost	$55,700.00
Interest on defined benefit obligation (894700 x 9%)	$80,523.00
Expected return on plan assets	($54,300.00)
Amortization of prior service cost	$49,800.00
Pension expense	$131,723.00
b) journal entry or entries to record pension expense and the employer's contribution
Account Titles and Explanation	Debit	Credit
Pension Expense	$133,723.00
Pension Asset /Liability (balancing figure)	$60,400.00
Cash		$144,323.00
Other Comprehensive Income (PSC)		$49,800.00
c) Sage Company
Income Statement (Partial)
For the year ended December 31, 2017
Expenses:
Pension Expense	$133,723.00
d) Sage Company
Comprehensive Income Statement
For the year ended December 31, 2017
Net Income / (Loss)	XXXXX
Other Comprehensive Income
Amortization of PSC	$49,800.00
Comprehensive Income	XXXXX
e) Sage Company
Balance Sheet (Partial)
31-Dec-17
Long-term Liabilities
Pension Liability ($1030923 - 800023)	$230,900.00
Stockholders' Equity
Accumulated Other Comprehensive Income (PSC) (402000 - 49800)	$352,200.00
Partial worksheet	Plan Assets	PBO
Bal. January 1, 2017	$601,400.00	$894,700.00
Service cost		$55,700.00
Interest on PBO		$80,523.00
Actual Return	$54,300.00
Contribution	$144,323.00
Bal. December 31,2017	$800,023.00	$1,030,923.00