U.S. Metallurgical Inc. reported the following balances in its financial stateme

Question

U.S. Metallurgical Inc. reported the following balances in its financial statements and disclosure notes at December 31, 2017 Plan assets Projected benefit obligation $590,000 500,000 us.M's actuary determined that 2018 service cost is $79,000. Both the expected and actual rate of return on plan assets are 10%. The interest (discount) rate is 6%.U.SM. contributed $139,000 to the pension fund at the end of 2018, and retirees were paid $63,000 from plan assets. (Enter you answers in millions (i.e., 10,000,000 should be entered as 10).) Required: 1 to 4. Determine the following amounts at the end of 2018. 5. Prepare journal entries to record the pension expense, funding of plan assets, and retiree benefit payments. Complete this question by entering your answers in the tabs below Req 1 to 4 Req 5 Determine the following amounts at the end of 2018. December 31, 2018 1 Pension expense 2 Projected benefit obligation 3 Plan assets iet pansion asu

Explanation / Answer

in millions 1 Pension Expenses 50,000       0.05 2 Projected benefit Obligation 546,000       0.55 3 Plan Assets 725,000       0.73 4 Net Pension Assets 179,000       0.18 Workings 1 Pension Expenses Service Cost 79,000 Add Interest Cost (@6% on $500,000) 30,000 less Expected and Actual return on Plan Assets (@10% on $590,000) 59,000 At the End of 2018 50,000 2 Projected benefit Obligation (PBO) Opening PBO 500,000 Add Current year Service Cost 79,000 Add Interest Cost (@6% on $500,000) 30,000 Less Benefits Paid during the year 63,000 At the End of 2018 546,000 3 Plan Assets Opening Fair value of Plan Assets 590,000 Add Contributions 139,000 Add Expected and Actual return on Plan Assets (@10% on $590,000) 59,000 Less Benefits Paid during the year 63,000 At the End of 2018 725,000 4 Net Pension Assets Plan Assets 725,000 Projected benefit Obligation (PBO) 546,000 At the End of 2018 179,000 Journal Entries Particulars Amounts To record pension expense 1 DR pension expense                                      50,000 CR Projected Benefit Obligation   50,000 2 To record company contribution to pension DR Plan Assets 139,000 CR Cash 139,000 3 To record retiree benefit payment DR Projected Benefit Obligation 63,000 CR Plan Assets 63,000

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