Question
In: Accounting
Cullumber Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2021, the...
Cullumber Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2021, the following balances related to this plan.
| Plan assets (market-related value) | $270,400 | ||
| Projected benefit obligation | 342,400 | ||
| Pension asset/liability | 72,000 | Cr. | |
| Prior service cost | 89,500 | ||
| OCI—Loss | 38,400 |
As a result of the operation of the plan during 2021, the actuary
provided the following additional data for 2021.
| Service cost | $44,200 | ||
| Actual return on plan assets | 27,600 | ||
| Amortization of prior service cost | 11,900 | ||
| Contributions | 64,400 | ||
| Benefits paid retirees | 41,400 | ||
| Settlement rate | 7 | % | |
| Expected return on plan assets | 8 | % | |
| Average remaining service life of active employees | 10 years |
1.Compute pension expense for Cullumber Corp. for the year 2021 by preparing a pension worksheet that shows the journal entry for pension expense. (Enter all amounts as positive.)
Solutions
Expert Solution
| Items | Annual Pension expenses | Cash | OCI-Prior service cost | OCI-Gain/Loss | Pension Asset/Liability | Projected benefit obligation | Plan assets |
| Opening Balances | 89500 | (38400) | 72000 | (342400) | 270400 | ||
| Service Cost | 44200 | (44200) | |||||
| Actual Return | (27600) | 27600 | |||||
| Interest cost | 23968 | (23968) | |||||
| Amortization PSC | 11900 | (11900) | |||||
| Amortization OCI Gain/Loss | 1100 | ||||||
| Unexpected Gain/Loss | 5968 | 5968 | |||||
| Contributions | (64400) | 1100 | 64400 | ||||
| Benefit Paid | 41400 | (41400) | |||||
| Journal Entry | 59536 | (64400) | (11900) | 7068 | 23832 | (18668) | 42500 |
| Accumulated OCI Dec312019 | 89500 | (38400) | |||||
| Balance Dec31,2020 | 77600 | (31332) | (48168) | (369168) | 321000 |
1.Pension expense= $59536
| Account title and explanation | Debit | Credit |
| Annual pension expense | 59536 | |
| OCI- Prior Cost service | 11900 | |
| OCI Gain/Loss | 7068 | |
| Cash | 64400 | |
| Net pensionAsset/Liability | 23832 |
| Account title and explanation | Debit | Credit |
| Plan Asset | 64400 | |
| Cash | 64400 |
| Account title and explanation | Debit | Credit |
| Net pension Asset/Liability | 41400 | |
| Cash | 41400 |
Net pension Asset/Liability= $48168
Projected benefit Obligation= $ (369168)
Less:- Plan Asset= 321000
Plan surplus/deficit= $48168
ekkarill92 answered 1 year agoRelated Solutions
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