Question
In: Accounting
Carla Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about...
Carla Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan.
| January 1, 2020 | December 31, 2020 | |||
| Vested benefit obligation | $1,480 | $1,870 | ||
| Accumulated benefit obligation | 1,870 | 2,670 | ||
| Projected benefit obligation | 2,500 | 3,260 | ||
| Plan assets (fair value) | 1,690 | 2,630 | ||
| Settlement rate and expected rate of return | 10% | |||
| Pension asset/liability | 810 | ? | ||
| Service cost for the year 2020 | 400 | |||
| Contributions (funding in 2020) | 690 | |||
| Benefits paid in 2020 | 200 |
Prepare a 2020 pension worksheet. (Enter all amounts as positive.)
|
CARLA COMPANY |
||||||||||||||||||
|
General Journal Entries |
Memo Record Entries |
|||||||||||||||||
|
Items |
Annual Pension |
Cash |
OCI— Gain/ |
Pension Asset/ |
Projected Benefit |
Plan |
||||||||||||
| Balance, Jan. 1, 2020 |
$ |
|||||||||||||||||
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
| Service cost |
| Interest cost |
| Actual return |
| Unexpected gain |
| Contributions |
| Benefits |
| Liability increase |
| Journal entry for 2020 |
$ |
|
$ |
| Accumulated OCI, Dec. 31, 2019 |
| Balance, Dec. 31, 2020 |
$ |
|
$ |
|
$ |
|
$ |
eTextbook and Media
List of Accounts
Prepare the journal entries at December 31, 2020, to record pension expense and related pension transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
| Dec. 31, 2020 | |||
eTextbook and Media
Solutions
Expert Solution
| Carla Company Pension Worksheet 2020 |
||||||||||||
| General Journal Entries | Memo record | |||||||||||
| Items | Annual Pension | Cash | OCI - Gain/Loss | Pension Asset/Liability | Projected Benefit | Plan Assets | ||||||
| Balance Jan 1, 2020 | 810 | Cr | 2500 | Cr | 1690 | Dr | ||||||
| Service cost | 400 | Dr | 400 | Cr | ||||||||
| Interest Cost | 250 | Dr | 250 | Cr | ||||||||
| Actual return | 450 | Cr | 450 | Dr | ||||||||
| Unexpected Gain | 281 | Dr | 281 | Cr | ||||||||
| Contributions | 690 | Cr | 690 | Dr | ||||||||
| Benefits | 200 | Dr | 200 | Cr | ||||||||
| Liability Increases | 310 | Dr | 310 | Cr | ||||||||
| Journal Entry for 2020 | 481 | Dr | 690 | Cr | 29 | Dr | 180 | Dr | ||||
| Accumulated OCI Dec 31, 2019 | 0 | |||||||||||
| Balance, Dce 31, 2020 | 29 | Dr | 630 | Cr | 3260 | Cr | 2630 | Dr |
Working Notes:
Actual returns = (2630-1690)-690+200 = 450
Liability increase = (3260-2500)-(400+250-200) = 310
| Date | Particulars | Debit ($) | Credit ($) |
| Dec 31, 2020 | Other Comprehensive loss (G/L) | 29 | |
| Pension Expenses | 481 | ||
| Pension Asset/Liability | 180 | ||
| Cash | 690 |
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