Question

In: Accounting

Teal Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the...

Teal Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan.
Plan assets $489,900
Projected benefit obligation 616,700
Pension asset/liability 126,800
Accumulated OCI (PSC) 95,600 Dr.

As a result of the operation of the plan during 2020, the following additional data are provided by the actuary.
Service cost $86,900
Settlement rate, 9%
Actual return on plan assets 57,100
Amortization of prior service cost 19,500
Expected return on plan assets 54,000
Unexpected loss from change in projected benefit obligation,
   due to change in actuarial predictions
77,700
Contributions 103,700
Benefits paid retirees 88,900

Using the data above, compute pension expense for Teal Corp. for the year 2020 by preparing a pension worksheet. (Enter all amounts as positive.)

Prepare the journal entry for pension expense for 2020. (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.)

Solutions

Expert Solution

Annual Pension Prior Projected
Pension Asset/ service Gain/ Benefit Plan
Expense Cash Liability Cost Loss Obligation Assets
Balance, Jan 1, 2020    (126,800)        95,600     (616,700)       489,900
Service Cost      86,900       (86,900)
Interest Cost      55,503       (55,503)
Actual/Expected Return     (57,100)         57,100
Return Adjustment (57,100 - 54,000)        3,100       (3,100)
Amortization Prior service cost      19,500      (19,500)
Loss from change in PBO       77,700       (77,700)
Contribution (103,700)       103,700
Benefit Paid        88,900        (88,900)
Journal Entry    107,903 (103,700)      (59,303)      (19,500)       74,600
Balance., Dec. 31, 2020              -                 -      (186,103)        76,100       74,600     (747,903)       561,800
Pension Expense    107,903
OCI Gain/Loss.      74,600
Cash     103,700
Pension Asset/Liability       59,303
Other Comprehensive Income (PSC)       19,500

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