Exercise 20-11 Monty Company sponsors a defined benefit pension plan for its emp

Question

Exercise 20-11 Monty Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2017 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2017 amounted to $55,500. 2. The company's funding policy requires a contribution to the pension trustee amounting to $136,360 for 2017 3. As of January 1, 2017, the company had a projected benefit obligation of $894,500, an accumulated benefit obligation of $806,900, and a debit balance of $396,000 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $600,000 at the beginning of the year. The actual and expected return on plan assets was $53,500. The settlement rate was 8%. No gains or losses occurred in 2017 and no benefits were paid. Amortization of prior service cost was $49,800 in 2017. Amortization of net gain or loss was not required in 2017. 4. Deterinine the amounts of the components of pension expense that should be recognized by the company in 2017. (Enter amounts that reduce pension expense with either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).) Components of Pension Expense

Explanation / Answer

Part 1 : Pension expense for 2017 composed of the following:- (Amount in $)

Part 2 : Journal Entry to record Pension expense and the employer's contribution (Amt. in $)

Part 3 : Partial Income statement and Balance sheet for the year 2017

Monty Company

Income Statement (partial)

for the year ended December 31, 2017

  Monty Company

Income Statement (partial)

for the year ended December 31, 2017

Monty Company

Balance Sheet (partial)

as on December 31, 2017

Service cost 55,500 Interest on projected benefit obligation (894,500*8%) 71,560 Amortization of prior service cost 49,800 Expected Return on Plan Assets (53,500) Pension Expense 123,360

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