On January 1, 2014, Harrington Company has the following defined benefit pension

Question

On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its pension agreement so that prior service costs of $507,300 are created. Other data related to the pension plan are as follows.

2014

2015

Prepare a pension worksheet for the pension plan for 2014 and 2015.

HARRINGTON COMPANY
Pension Worksheet—2014 and 2015

General Journal Entries

Memo Record

Annual Pension
Expense

Cash

OCI—Prior
Service Cost

OCI—Gain/
Loss

Pension Asset/
Liability

Projected Benefit
Obligation

Plan
Assets

Projected benefit obligation $4,514,000 Fair value of plan assets 4,203,300

Explanation / Answer

Answer:

Harrington company Pension worksheet- 2014 and 2015 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, 2014 -310700 -4514000 4203300 a) service cost 157900 -157900 b) Interest cost 451400 -451400 c) Actual return -252198 252198 d) Contributions -251600 251600 e) Benefits 203800 -203800 Journal entry, 12/31/14 357102 -251600 0 0 -105502 Accum OCI, 12/31/13 Balance, Dec. 31, 2014 -416202 -4919500 4503298 f) additional PSC 507300 -507300 January 1, 2015 -5426800 g) service cost 189300 -189300 h) interest cost 542680 -542680 i) Actual return -271300 271300 j) unexpected loss -88963.84 88963.84 k) Amortization of PSC 90500 -90500 l) Contributions -304800 304800 m) Benefits 297500 -297500 Journal entry, 12/31/15 462216.16 -304800 416800 88963.84 -663180 Accum OCI, 12/31/14 0 0 Balance dec 31,2015 416800 88963.84 -1079382 -5861280 4781898

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