Question

1. Complete the pension worksheet using the information provided below:

Items Balance, Jan. 1, 2020	Annual Pension Expense	Cash	OCI - Prior Service Cost	OCI- Gains/ Losses	Pension Asset/ Liability	Projected Benefit Obligation	Plan Assets
Service cost
Interest cost
Actual return
Unexpected gain/loss
Amortization of PSC
Contributions
Benefits
Journal entry for 2020

2020 records of Lexxus Company provided the following data related to its noncontributory defined benefit pension plan.

ACCOUNT BALANCES (‘000s)    Jan. 1, 2020                Activity (‘000s)                                              2020

Projected Benefit Obligation $300 cr                                    Service cost                                                     $ 50

Plan Assets                             170 dr                                    Contributions                                                  110

Accumulated OCI – PSC            40 dr                                    Actual return on plan assets                                 8

Accumulated OCI - G/L            25 dr                                    Amortization of PSC                                          4

Remaining Service Life              10 years                               Pension benefits paid to retirees                       124

OTHER                                                         

Expected rate of return on plan assets            6%

Discount/Settlement rate                                8%

2. Perform the corridor test of OCI-Gains/Losses. Show your work here:
3. Provide the end of year journal entry based on worksheet amounts.
4. Explain the difference between a defined contribution pension plan and a defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.

Answer 1

2020 General Journal Entries Memo Record Pension Work Sheet Negative sign indicates Credits Positive Sign Indicates Debits Annual Pension Expense OCI -Prior Service OCI - Gain /L088 Penolon Agget/Liability Projected Benefit Obligation Items Cost Plan assets (130) Cr (300) 150) 124) Balanco, Jan 1, 2020 Service cost Interest cost (settlement rate PBO X 8%) Actual Return Unexpected Loss Ilgalni Amortisation of Past service cost Amortization of net gain or loss-AOCI Contributions Bencfits Journal entry for 2020 Accumulated OCI, 1 Jan 2020 Balance Dec. 2020 (4) Cr. (110) Cr. (110) Cr. 110 Dr. (124) Cr. 44 Dr (4) Cr. 40 Dr. 36 Dr. 27 Dr. (86) Cr (250) Cr. 164 Dr. Amortization of net gain or loss-AOCI Corridor Approach Projected Benefit Obligation Year Plan assets Corridor @10% Cumulative Unrecognized Gain or loss Minimum amortization of gain or Loss 2020 300 170 30 The average remaining service life of active employees is 10 years If the cumulative unrecognized gain or loss is equal to or less than the 10% calculated value, no amount need be amortized 50 Determine the components of pension expense that the company would recognize in 2021 Service cost Interest cost (settlement rate PBO XB'S) Expected Return (10) Amortisation of Past service cost Amortization of net gain or loss-AOCI Pension Expense BB 4 ,050 credit Prepare all the Journal Entries 1, Joumal entry for entries) to record all pension effects for 2020 Account title & explanation Debit Penelon expense Pension Asset / Llability Other comprehensive Income(G/L) Other comprehensive Income(PSC) Cash Record the Journal entry for pension expense for 2020 Penelon Expense Plan Assets Amortisation of not gain/loss-OCI Amortisation of Prior service cost-OCI PBO Record Past Service Cost Loss-OCI (PSC) PBO Record the journal entry for gain or losses in plan assets for 2020 Loss./Gain-OCI Plan Assets Record the journal entry for gain or losses in PBO for 2020 Loss./Gain-OCI PBO Record the journal entry for cash contribution to plan assets for 2020 Plan Assets Cash 110 110 Record the journal entry for benefits paid to employees for 2020 PBO Plan Assets 124 IT:

A defined-contribution plan allows employees and employers to contribute and invest funds over time to save for retirement. A defined benefit plan is a retirement account for which employer ponies up all the money and promises employee a set payout when they retire Employers fund and guarantee a specific retirement benefit amount for each participant of a defined-benefit pension plan. Defined-contribution plans are funded primarily by the employee, as the participant defers a portion of their gross salary