Question

Exercise 20-10

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

Plan assets $477,500
Projected benefit obligation 609,400
Pension asset/liability 131,900
Accumulated OCI (PSC) 100,800 Dr.

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

Service cost $90,600
Settlement rate, 9%
Actual return on plan assets 56,600
Amortization of prior service cost 18,200
Expected return on plan assets 53,700
Unexpected loss from change in projected benefit obligation,
   due to change in actuarial predictions 78,800
Contributions 102,900
Benefits paid retirees 81,300

Using the data above, compute pension expense for Nash Corp. for the year 2017 by preparing a pension worksheet. (Enter all amounts as positive.)

NASH CORP.
Pension Worksheet
General Journal Entries

Memo Record
Items

Annual Pension
Expense
Cash
OCI—Prior
Service Cost
OCI— Gain/
Loss
Pension Asset/
Liability

Projected Benefit
Obligation
Plan
Assets
Balance, Jan. 1, 2017
$

Dr.
Cr.
$

Dr.
Cr.
$

Dr.
Cr.
$

Dr.
Cr.
$

Dr.
Cr.

$

Dr.
Cr.
$

Dr.
Cr.
Service cost

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Interest cost

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Actual return

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Unexpected gain

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Amortization of PSC

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Liability increase

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Contributions

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Benefits

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Journal entry for 2017
$

Dr.
Cr.
$

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Accumulated OCI, Dec. 31, 2016

Dr.
Cr.

Dr.
Cr.

Dr.
Cr.


Dr.
Cr.

Dr.
Cr.
Balance, December 31, 2017
$

Dr.
Cr.
$

Dr.
Cr.
$

Dr.
Cr.

$

Dr.
Cr.
$

Dr.
Cr.

SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
LINK TO TEXT
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Prepare the journal entry for pension expense for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit

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Answer 1

Answer 1.

NASH CORP.

Pension Worksheet - 2017

General Journal Entries

Memo Record

Items

Annual Pension Expense

Cash

OCI–Prior Service Cost

OCI - Gain/Loss

Pension Asset/ Liability

Projected Benefit Obligation

Plan Assets

Balance, Jan 1, 2017

131,900

cr

609,400

cr

477,500

dr

Service cost

90,600

dr

90,600

cr

Interest cost - $609,400 X 9%

54,846

dr

54,846

cr

Actual return

56,600

cr

56,600

dr

Unexpected Gain - $56,600 - $53,700

2,900

dr

2,900

Cr.

Amortization of PSC

18,200

dr

18,200.00

cr

Liability Increases

78,800

Dr.

78,800

cr

Contributions

102,900

cr

102,900

dr

Benefits

81,300

dr

81,300

cr

Journal entry for 2017

109,946

dr

102,900

cr

18,200.00

cr

75,900

Dr.

64,746

cr

Accumulated OCI, Dec. 31, 2016

100,800.00

dr

-

Balance, Dec. 31, 2017

82,600.00

dr

75,900

Dr.

196,646

cr

752,346

cr

555,700

dr

Answer 2.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1	Pension Expense	109,946.00
	Other Comprehensive Income (G/L)	75,900.00
	Cash		102,900.00
	Other Comprehensive Income (PSC)		18,200.00
	Pension Asset/Liability		64,746.00
	(record the pension expense)