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Exercise 20-7 The following defined pension data of Sarasota Corp. apply to the year 2017. Projected...
Exercise 20-7
The following defined pension data of Sarasota Corp. apply to
the year 2017.
| Projected benefit obligation, 1/1/17 (before amendment) | $568,000 | ||
| Plan assets, 1/1/17 | 553,400 | ||
| Pension liability | 14,600 | ||
| On January 1, 2017, Sarasota Corp., through plan
amendment, grants prior service benefits having a present value of |
130,000 | ||
| Settlement rate | 10 | % | |
| Service cost | 58,500 | ||
| Contributions (funding) | 64,300 | ||
| Actual (expected) return on plan assets | 47,100 | ||
| Benefits paid to retirees | 36,300 | ||
| Prior service cost amortization for 2017 | 17,400 |
For 2017, prepare a pension worksheet for Sarasota Corp. that shows
the journal entry for pension expense and the year-end balances in
the related pension accounts.
Solutions
Expert Solution
| Sarasota Corp. | ||||||||||||
| Pension Worksheet- 2017 | ||||||||||||
| General Journal Entries | Memo Record | |||||||||||
| Items | Annual Pension Expense | Cash | OCI-Prior Service Cost | Pension Asset/ Liability | Projected Benefit Obligation | Plan Assets | ||||||
| Balance, Jan 1, 2017 (before amendment) | $ 14,600 | Cr. | $ 568,000 | Cr. | $ 553,400 | Dr. | ||||||
| Additional PSC, 1/1/2017 | $ 130,000 | Dr. | $ 130,000 | Cr. | ||||||||
| Balance, Jan 1, 2017 | $ 130,000 | Dr. | $ 144,600 | Dr. | $ 698,000 | Dr. | $ 553,400 | Dr. | ||||
| Service cost | $ 58,500 | Dr. | $ 58,500 | Cr. | ||||||||
| Interest cost (698000*10%) | $ 69,800 | Dr. | $ 69,800 | Cr. | ||||||||
| Actual (expected) return | $ 47,100 | Cr. | $ 47,100 | Dr. | ||||||||
| Amortization of PSC | $ 17,400 | Dr. | $ 17,400 | Cr. | ||||||||
| Contributions | $ 64,300 | Cr. | $ 64,300 | Dr. | ||||||||
| Benefits | $ 36,300 | Dr. | $ 36,300 | Cr. | ||||||||
| Journal entry for 2017 | $ 98,600 | Dr. | $ 64,300 | Cr. | $ 17,400 | Cr. | $ 16,900 | Dr. | ||||
| Accumulated OCI, Jan 1, 2017 | $ 130000 | Dr. | ||||||||||
| Balance, Dec 31, 2017 | $ 112,600 | $ 161,500 | Cr. | $ 790,000 | Cr. | $ 628,500 | Dr. | |||||
| Journal entry | |||
| Account Titles and Explanation | Debit | Credit | |
| Pension Expense | $ 98,600 | ||
| Cash | $ 64,300 | ||
| OCI-PSC | $ 17,400 | ||
| Pension Asset/ Liability | $ 16,900 | ||
| (To record pension expense) |
Feel free to ask any clarification, if required. Kindly provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.
ekkarill92 answered 2 years agoRelated Solutions
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