Amherst City provides a defined benefit pension plan for employees of the city e

Question

Amherst City provides a defined benefit pension plan for employees of the city electric utility, an enterprise fund. Assume that the projected level of earnings on plan investments is $190,000, the service cost component is $250,000, and interest on the pension liability is $160,000 for the year. Actual returns on plan assets for the year were $175,000, and the City is amortizing a deferred outflow resulting from a change in plan assumptions from a prior year in the amount of $6,000 per year. Prepare journal entries to record annual pension expense for the enterprise fund.

Explanation / Answer

Amherst City Defined benefit pension plan for employees of the city electric utility Projected level of earnings 190000 Service cost componnent 250000 Interest on the pension liability for the year 160000 Actual return on plan assets for the year 175000 Anortization of deferred outflow resulting from a change in plan assumptions from a prior year 6000 Journal entries to record annual pension expense for the enterprise fund 2017 Annual pension fund expense Debit $ Credit $ Pension fund expense 271000 Amortization of deferred payment outflow 6000 Service cost 250000 Interest: 15000 Actual return on plan assets for the year 175000 Interest on the pension liability for the year 160000 (Entry to record annual deferred income and Service cost)

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