Baron Company adopted a defined benefit pension plan on January 1, 2015. The following information pertains...

Baron Company adopted a defined benefit pension plan on January 1, 2015. The following information pertains to the pension plan for 2016 and 2017:

	2016	2017
Service cost	$150,000	$160,000
Projected benefit obligation (1/1)	112,500	269,250
Plan assets (1/1)	112,500	275,750
Company contribution (funded 12/31)	156,500	170,000
Discount rate	6%	6%
Expected long-term (and actual) rate of return on plan assets	6%	6%

There are no other components of Baron’s pension expense.

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Part 1			2016	2017
		Service cost	$ 150,000	$ 160,000
	Add:	Interest cost ($112500 x 6%)/ ($269250 x 6%)	6735	16155
	Less:	Expected return on plan assets ($112500 x 6%) / (275750 x 6%)	(6735)	(16545)
		Pension expense	$ 150,000	$ 159,610

Part 2	Since the company funds $156500 in 2016, it records the following journal entry on December 31, 2016:

	Dec 31, 2016	Pension Expense	$ 150,000
		Accrued/Prepaid Pension Cost	$ 6,500
		Cash		$ 156500

	Since the company funds $170,000 in 2016, it records the following journal entry on December 31, 2017:

	Dec 31, 2017	Pension Expense	$ 159,610
		Accrued/Prepaid Pension Cost	$ 10,390
		Cash		$ 170,000

ekkarill92 answered 1 year ago

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