2017 2018 a) Prepare a pension worksheet presenting both years 2017 and 2018. (R
ID: 2430352 • Letter: 2
Question
2017
2018
a)
Prepare a pension worksheet presenting both years 2017 and 2018. (Round answers to 0 decimal places, e.g. 5,125. Enter all amounts as positive.)
b)
Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year. (Round answers to 0 decimal places, e.g. 5,125. 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.)
c)
For 2018, indicate the pension amounts reported in the financial statements. (Round answers to 0 decimal places, e.g. 5,125.)
Marigold Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2017 and 2018.2017
2018
Projected benefit obligation, January 1 $601,000 Plan assets (fair value and market-related value), January 1 413,800 Pension asset/liability, January 1 187,200 Cr. Prior service cost, January 1 161,600 Service cost 40,200 $59,000 Settlement rate 10 % 10 % Expected rate of return 10 % 10 % Actual return on plan assets 35,900 61,200 Amortization of prior service cost 69,800 50,500 Annual contributions 96,700 81,000 Benefits paid retirees 31,400 54,600 Increase in projected benefit obligation due to changes in actuarial assumptions 86,900 0 Accumulated benefit obligation at December 31 716,500 788,800 Average service life of all employees 20 years Vested benefit obligation at December 31 466,800Explanation / Answer
2017 2018 Project Benefit Obligation Jan 1 $ 6,01,000.00 Plan Assets(Fair value) Jan 1 $ 4,13,800.00 Pension Assets/Liability Jan 1 $ 1,87,200.00 Prio Service Cost, Jan 1 $ 1,61,600.00 Service Cost $ 40,200.00 $ 59,000.00 Settlement Rate 10% 10% Expected Rate of Return 10% 10% Actual Return on Plan Assets $ 35,900.00 $ 61,200.00 Amortization of Prior Service cost $ 69,800.00 $ 50,500.00 Actual Contribution $ 96,700.00 $ 81,000.00 Benfit paid to retirees $ 31,400.00 $ 54,600.00 Increase in Project benefit obligation $ 86,900.00 Accumulated benefit obligation Dec 31st $ 7,16,500.00 $ 7,88,800.00 Average Service life of employees 20 Years Vested Benefit obligation $ 4,66,800.00 Marigold Company Pension Worksheet General, Journal Entries Memo Record Item Annual Pension Expense Cash OCI-Prior Service Cost OCI-Gain/Loss Pension Assets/Liability Projected Benefit obligation Plan Assets Balance on 1st Jan 2017 $ 1,87,200.00 $ 6,01,000.00 $ 4,13,800.00 Service Cost $ 40,200.00 $ 40,200.00 Interest Cost($600000*10%) $ 60,100.00 $ 60,100.00 Actual Return $ 35,900.00 $ 35,900.00 Unexpected Loss($413800*10%-$35900) $ 5,480.00 $ 5,480.00 Amortization of Prior service cost $ 69,800.00 $ 69,800.00 Contribution $ 96,700.00 $ 96,700.00 Benefits $ 31,400.00 $ 31,400.00 Increase in Project benefit $ 86,900.00 $ 86,900.00 Journal Entry for 2017 $ 1,28,720.00 $ 96,700.00 $ 69,800.00 $ 92,380.00 $ 54,600.00 Accumulated OCI,Dec 31st 2016 $ 1,61,600.00 $ - Balance on Dec 31st 2017 $ 91,800.00 $ 92,380.00 $ 2,41,800.00 $ 7,56,800.00 $ 5,15,000.00 Service Cost $ 59,000.00 $ 59,000.00 Interest Cost($755000*10%) $ 75,680.00 $ 75,680.00 Actual Return $ 61,200.00 $ 61,200.00 Unexpected Gain $ 9,700.00 $ 9,700.00 Amortization of Prior service cost $ 50,500.00 $ 50,500.00 Amortization of loss $ 835.00 $ 835.00 Contributions $ 81,000.00 $ 81,000.00 Benefits $ 54,600.00 $ 54,600.00 Journal Entry for 2018 $ 1,34,515.00 $ 81,000.00 $ 50,500.00 $ 10,535.00 $ 7,520.00 Accumulated OCI,Dec 31st 2017 $ 91,800.00 $ 92,380.00 Balance on Dec 31st 2018 $ 41,300.00 $ 81,845.00 $ 2,34,280.00 $ 8,36,880.00 $ 6,02,600.00 Blue highlighted figures are credit Black highlighted figures are debit Accumulated gain or loss at the beginning of 2018 $ 92,380.00 10% of larger of PBO or Fair Value of Plan Assets=($756800*10%) $ 75,680.00 Amortization $ 16,700.00 Amortization in 2018 when service life is 20 years=($16700/20) $ 835.00 b) Journal Entries in 2017 Particular Amt(Dr) Amt (Cr) Pension Expense $ 1,28,720.00 Other Comprehensive Income/Loss $ 92,380.00 To Cash $ 96,700.00 To PensionAssets/Pension Liability $ 54,600.00 To Other Comprehensive Income $ 69,800.00 Journal Entries in 2018 Particular Amt(Dr) Amt (Cr) Pension Assets/Liabiltiy $ 7,520.00 Pension Expense $ 1,34,515.00 To Cash $ 81,000.00 To Other Comprehensive Income(PSC) $ 50,500.00 To Other Comprehensive Income(G/L) $ 10,535.00
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