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 ago

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