Exercise 20-12 Carla Company received the following selected information from it

Question

Exercise 20-12 Carla Company received the following selected information from its pension plan trustee concerning the operation of the company's defined benefit pension plan for the year ended December 31, 2017. January 1, 2017 $1,499,000 802,000 1,622,000 December 31, 2017 Projected benefit obligation Market-related and fair value of plan assets $1,527,000 1,127,200 1,742,500 199,900 Accumulated benefit obligation Accumulated OCI (G/L)-Net gain The service cost component of pension expense for employee services rendered in the current year amounted to $78,000 and the amortization of prior service cost was $120,500. The company's actual funding (contributions) of the plan in 2017 amounted to $245,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of Si,205,000 on January 1, 2017, Assume no benefits paid in 2017 Determine 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

Carla Company

Income Statement (partial)

for the year ended December 31, 2017

  Carla Company

Income Statement (partial)

for the year ended December 31, 2017

Carla Company

Balance Sheet (partial)

as on December 31, 2017

Service cost 78,000 Interest on projected benefit obligation (1,499,000*10%) 149,900 Amortization of prior service cost 120,500 Expected Return on Plan Assets (802,000*10%) (80,200) Pension Expense 268,200

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