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BEST CO sponsors a defined benefit pension plan for its employees. On January 1, 2010, the...
BEST CO sponsors a defined benefit pension plan for its employees. On January 1, 2010, the following balances relate to this plan. GHS Plan assets 480,000 Defined benefit obligation 625,000 Pension asset/liability 45,000 Unrecognized past service cost 100,000 As a result of the operation of the plan during 2010, the following additional data are provided by the actuary. Service cost for 2010 90,000 Discount rate, 9% Actual return on plan assets in 2010 57,000 Amortization of past service cost 19,000 Expected return on plan assets 52,000 Unexpected loss from change in defined benefit obligation, due to change in actuarial predictions 76,000 Contributions in 2010 99,000 Benefits paid retirees in 2010 85,000 Instructions (a) Using the data above, compute pension expense for BEST Co. for the year 2010 by preparing a pension worksheet that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
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Worksheet:
| Items | Annual pension expense | Cash | AOCI-PSC | OCI Gain | Pension asset/liability | Projected benefit obligation | Plan assets | |||||||
| Amount | Dr/cr | Amount | Dr/cr | Amount | Dr/cr | Amount | Dr/cr | Amount | Dr/cr | Amount | Dr/cr | Amount | Dr/cr | |
| Balance Jan 1, 2010 | 100,000 | Dr | Cr | 145,000 | Cr | 625,000 | Cr | 480,000 | Dr | |||||
| Service cost | 90,000 | Dr | 90,000 | Cr | 90,000 | Cr | ||||||||
| Interest cost | 56,250 | Dr | 56,250 | Cr | 56,250 | Cr | ||||||||
| PSC amortisation | 19,000 | Dr | 19,000 | Cr | ||||||||||
| Return on plan assets | 52,000 | Cr | 5,000 | Cr | 57,000 | Dr | 57,000 | Dr | ||||||
| OCI Gain amortisation | - | Cr | - | Dr | ||||||||||
| New prior service cost | - | Dr | - | Dr | Cr | |||||||||
| Loss due to change in acturial assumptions | 76,000 | Dr | 76,000 | Cr | ||||||||||
| Contributions | 99,000 | Cr | 99,000 | Dr | 99,000 | Dr | ||||||||
| Benefits paid | 85,000 | Dr | 85,000 | Cr | ||||||||||
| Jounral for 2010 | 113,250 | Dr | 99,000 | Cr | 19,000 | Cr | 71,000 | Dr | 9,750 | Dr | 137,250 | Cr | 71,000 | Dr |
| Opening balance Jan 1, 2010 | 100,000 | Dr | - | Cr | 145,000 | Cr | 625,000 | Cr | 480,000 | Dr | ||||
| Balance Dec 31, 2010 | 81,000 | Dr | 71,000 | Dr | 135,250 | Cr | 762,250 | Cr | 551,000 | Dr |
Pension expense:
| Pension expense | 2010 |
| Service cost | $ 90,000 |
| Interest cost | $ 56,250 |
| PSC amortisation | $ 19,000 |
| Return on plan assets | $ (52,000) |
| OCI Gain amortisation | $ - |
| Expense | $ 113,250 |
Journal:
| Account | Debit | Credit | |
| Pension asset/liability | 99,000 | ||
| Cash | 99,000 | ||
| [ Cash contributed to the pension fund] | |||
| Defined benefit liability | 85,000 | ||
| Pension plan assets | 85,000 | ||
| [ Benefits paid during the year] |
| Account | Debit | Credit |
| Pension expense | $ 113,250 | |
| AOCI net gain | $ - | $ 5,000 |
| Pension asset/liability | $ 57,000 | $ - |
| AOCI Prior service cost | $ - | $ 19,000 |
| Pension asset/liability | $ - | $ 146,250 |
Please rate.
ekkarill92 answered 2 years agoRelated Solutions
BEST CO sponsors a defined benefit pension plan for its employees. On January 1, 2010, the...
BEST CO sponsors a defined benefit pension plan for its
employees.
On January 1, 2010, the following balances relate to this
plan.
GHS Plan assets 480,000
Defined benefit obligation 625,000
Pension asset/liability 45,000
Unrecognized past service cost 100,000
As a result of the operation of the plan during 2010, the
following additional data are provided by the actuary. Service cost
for 2010 is 90,000
Discount rate, 9%
Actual return on plan assets in 2010 is 57,000
Amortization of past service...
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Projected benefit obligation
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Pension asset/liability
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Accumulated OCI (PSC)
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Amortization of prior service cost
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Expected return on plan assets...
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Projected benefit obligation
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Pension asset/liability
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Accumulated OCI (PSC)
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Accumulated OCI (PSC)
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Projected benefit obligation
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Net gain or loss (debit)
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Accumulated OCI (PSC) 96,900 Dr.
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Settlement rate, 9%
Actual return on plan assets 54,200
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Actual return on plan assets
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