Question

Use the following set of information to prepare a pension worksheet. Also, make the appropriate journal entry to record pension expense for 2018. Hayworth Inc. has the following information related to its defined-benefit pension plan :

Projected Benefit Obligation, 1/1/2018 (before amendment) $675,000

Accumulated Benefit Obligation, 1/1/2018 (before amendment) 475,000

Vested Benefit Obligation, 1/1/2018 (before amendment) 375,000

Pension Assets, 1/1/2018 525,000

Service Cost 90,000

Settlement rate 6%

Expected rate of return on plan assets 10%

Actual return on plan assets 30,000

Benefits paid to retirees 72,000

Contributions to plan 80,000

Amortization of prior service costs 20,000

On 1/1/2018, Hayworth Inc. grants prior service benefits having a present value of 100,000

Unamortized Gain, 1/1/2018 100,000

Average service life of all employees 10 years

Unamortized Prior Service Cost (OCI), 1/1/2018 150,000

Answer 1

Annual pension expense Cash Net defined benefit Accured befit obligation Plan assets
	Balance on 1-1-18	=	15,25,000
	service cost	=	90,000
	Benefits Paid	=	72,000
	Actual Returns	=	30,000
	Contribution Entry	=	80,000
Journal Entries
Date	Particulars	Amount	Amount
01-01-2018	Projected benefit obligation A/c	Dr	675000
	Accumulated benefit obligation A/c	Dr	475000
	Vested benefit obligation	Dr	375000
	To Cash			1525000
"	PBO A/c	Dr	72000
	To PA			72000
"	Pension expense A/c	Dr	90000
	To PBO			90000
"	PA A/c	Dr	52500
	To Cash			52500
"	Plant Asset for Actual A/c	Dr	30000
	To Pension Expenses			30000
"	Other comprehensive income A/c	Dr	150000
	To net defined liability			150000