Question

Question 10

Sheridan Company provides the following information about its defined benefit pension plan for the year 2020.

Service cost		$89,800
Contribution to the plan		107,000
Prior service cost amortization		10,700
Actual and expected return on plan assets		65,200
Benefits paid		40,100
Plan assets at January 1, 2020		647,500
Projected benefit obligation at January 1, 2020		707,800
Accumulated OCI (PSC) at January 1, 2020		147,500
Interest/discount (settlement) rate		9	%

1. Prepare a pension worksheet inserting January 1, 2020, balances, showing December 31, 2020. (Enter all amounts as positive.)

2. Prepare the journal entry recording pension expense. (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

	JOURNAL ENTRIES	MEMO RECORD
ITEMS	ANNUAL PENSION EXPENSE	CASH	OCI PRIOR SERVICE COST	PENSION ASSET / LIABILITY	PROJECTED BENEFIT OBLIGATION	PLAN ASSETS
BALANCE , JAN 1, 2020				60300 CR	707800 CR	647500 DR
SERVICE COST	89800 DR				89800 CR
INTEREST COST *	63702 DR				63702 CR
ACTUAL RETURN	65200 CR					65200 DR
AMORTIZATION OF PSC	10700 DR		10700 CR
CONTRIBUTION		107000 CR				107000 DR
BENEFITS					40100 DR	40100 CR
JOURNAL ENTRY FOR 2020	99002 DR	107000 CR	10700 CR	18698 DR
ACCUMULATED OCI, DEC 31 2019			147500 DR
BAL DEC .31, 2020			136800 DR	41602 CR	821202 CR	779600 DR

* 707800 * 9% = 63702

Date	Account Tiles & Explanation	Debit	Credit
Dec 31, 2020	Annual Pension Expense	99002
	Pension Asset Liability	18698
	To Cash		107000
	To OCI - PSC		10700

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