In: Accounting
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.)
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 |
Please hit like if this helps! Comment in case of any doubts.