Presented below is information related to Julie, Inc. pension plan for 2015. Acc
ID: 2963041 • Letter: P
Question
Presented below is information related to Julie, Inc. pension plan for 2015.
Accumulated benefit obligation (at year-end) $450,000
Service cost 13,300
Funding contribution for 2015 120,000
Amortization of PSC (due to benefit increase) 65,000
Amortization of net gains 10,000
Settlement rate used in actuarial computation 13%
Expected return on plan assets -4%
Projected benefit obligation (at beginning of period) 220,000
Fair value of plan assets (at beginning of period) 550,000
(a) Compute the amount of pension expense to be reported for 2015.
(b) Prepare the journal entry to record pension expense and the employer's contribution for 2015.
Explanation / Answer
a)
Service Cost---------------------------------------------------------------------------------------------------------------- $13.300
Interest on Projected benefit obligation($220,000*0.13)------------------------------------------------------ $28,600
Expected Returns on Plan assets ($550,000*0.04)----------------------------------------------------------- (-)$22,000
Amortization of PSC------------------------------------------------------------------------------------------------------$65,000
Amortization of net gains-----------------------------------------------------------------------------------------------$10,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Pension Expense-2015------------------------------------------------------------------------------------------------$94,900
-----------------------------------------------------------------------------------------------------------------------------------------------
b)
Pension Expense------------------------------------------------------------------------------------$94,900
Other Comprehensive income ----------------------------------------------------------------- $10,000
Cash-------------------------------------------------------------------------------------------------------------------------$120,000
Other Comprehensive income(PSC)-----------------------------------------------------------------------------$ 65,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Person Asset/Liabilty--------------------------------------------------------------------------------------------------$80,100
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