ACFI-492/592 Pension Problem The following defined pension data of BSU, Inc. app

Question

ACFI-492/592 Pension Problem The following defined pension data of BSU, Inc. apply to the year 2017. Projected benefit obligation, 1/1/17 Plan assets, 1/1/17 Prior service costs, 1/1/17 Settlement rate Expected rate Service cost Contributions (funding) Actual (expected) return on plan assets Benefits paid to retirees Prior service cost amortization for 2017 $485,000 460,000 80,000 9% 1096 42,200 55,000 38,000 22,000 25,000 Instructions: For 2017, complete the attached pension work sheet for BSU, Inc. and prepare the journal entry for pension expense.

Explanation / Answer

Solution:

Completing the Attached Pension Worksheet for BSU Inc., and Preparing the Journal Entry for Pension Expense:

Items Expenses Cash PSC Loss Liability Obligation Assets Balance, January 1, 2017 $25,000 Cr. $485,000 Cr. $460,000 Dr. Prior service cost $80,000 Dr. $80,000 Cr. Adj,. Bal. 1/1/17 $565,000 Cr. $460,000 Dr. Service Costs $42,400 Dr. $42,400 Cr. Interest $50,850 Dr. $50,850 Cr. Return on Assets $38,000 Cr. $38,000 Dr. Unexpected gain/loss $0 $0 Amort. of PSC $25,000 Dr. $25,000 Cr. Contributions $55,000 Cr. $55,000 Dr. Benefits Paid $22,000 Dr. $22,000 Cr. Journal Entry $80,250 Dr. $55,000 Cr. $55,000 Dr. $80,250 Cr. AOCI - 12/31/16 $0 Dec 31, 2017 $55,000 Dr. $105,250 Cr. $636,250 Cr. $531,000 Dr.

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