The accountant for Windows Corp. has developed the following information for the
ID: 2468551 • Letter: T
Question
The accountant for Windows Corp. has developed the following information for the company's defined-benefit pension plan for 2011:
1) Using the above information for Windows Corp, complete the pension work sheet for 2011. Indicate (credit) entries by parentheses. Calculated amounts should be supported.
2) Prepare the journal entry to reflect the accounting for the company's pension plan for the year ending December 31, 2011.
Service Cost $500,000 Actual return on plan assets 260,000 Annual contribution to plan 900,000 Amortization of prior service cost 105,000 Benefits paid to retirees 60,000 Settlement rate 10% Expected rate of return on plan assets 8% Actuary determines that end-of-year PBO should be 4,600,000Explanation / Answer
(a). Pension worksheet 2011
Annua
Pension
Expense
prior
Service
Cost
Gain//
Loss
Pension
Asset/
Liabilities
Projected
Benefit
Obligation
Working notes;
(1) 3750000×10%=375000
(2) 260000-(2750000×8%)=40000
(b)
Pension expense. 760000
Pension assets/liabilities 285000
Cash 900000
Other comprehensive income(PSC) 105000
Other comprehensive income(gain/loss) 40000
Annua
Pension
Expense
Cashprior
Service
Cost
Gain//
Loss
Pension
Asset/
Liabilities
Projected
Benefit
Obligation
Plan assets Balance Dec31,2010 625000 (1000000) (3750000) 2750000 Service cost 500000 (500000) Interest cost(1) 375000 (375000) Actual return (260000) 260000 Unexpected gain/loss(2) 40000 (40000) Amortization of PSC 105000 (105000) Contribution (900000) 900000 Benefits 60000 (60000) Gain/Loss amortization Journal entry for 2011 760000 (900000) (105000) (40000) 285000 AOCI,12/31/10 625000 0 Balance. Dec31,2011 520000 (40000) (715000) (4565000) 3850000Related Questions
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