Question
In: Accounting
Exercise 20-10 Nash Corp. sponsors a defined benefit pension plan for its employees. On January 1,...
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.
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$
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$
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$
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$
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$
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Service cost
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Dr.
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Interest cost
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Actual return
Dr.
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Unexpected gain
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Amortization of PSC
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Liability increase
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Contributions
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Benefits
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Journal entry for 2017
$
Dr.
Cr.
$
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Cr.
Dr.
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Dr.
Cr.
Dr.
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Dr.
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Dr.
Cr.
Accumulated OCI, Dec. 31, 2016
Dr.
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Dr.
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Balance, December 31, 2017
$
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$
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$
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$
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$
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SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
LINK TO TEXT
LINK TO TEXT
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
Click if you would like to Show Work for this question:
Open Show Work
Solutions
Expert Solution
| 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) | |||
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