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Part 1) Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January...

Part 1) Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan.

Plan assets

$480,000

Projected benefit obligation

625,000

Accumulated OCI (PSC)

100,000 Dr.

Accumulated OCI (Gain/Loss)

85,000 Cr.

As a result of the operation of the plan during 2017, the following additional data are provided by the actuary:

Service cost for 2017

$90,000

Settlement rate

9%

Actual return on plan assets in 2017

57,000

Expected return on plan assets

10%

Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions

76,000

Contributions in 2017

99,000

Benefits paid retirees in 2017

85,000

Avg. remaining service life (all employees)

12 years

1) Please use the spreadsheet below to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.

Annual Projected
Pension OCI—Prior OCI— Pension Benefit
Items Expense Cash Service Cost Gain/Loss Asset/Liability Obligation Plan assets
Balance, Jan. 1, 2015
Service cost
Interest cost
Actual Return
Expected Return
Amortization of PSC
Contributions
Benefits
Liability increase
Journal entry for 2015
Accumulated OCI, Dec. 31, 2014
Balance, Dec. 31, 2015

2) Prepare the journal entry using a spreadsheet to record pension expense in 2017. Please provide a one line explanation for the reason why the journal entry has been made. Thanks very much!

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Expert Solution

ekkarill92 answered 2 years ago
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