Jackson Company adopts acceptable accounting for its defined befefit pension plan on January 1, 2013 with...
| Jackson Company adopts acceptable accounting for its defined befefit pension plan on January 1, 2013 | ||||||||||
| with the following beginning balances: plan assets = $200,000; projected benefit obligation = $250,000 | ||||||||||
| Other data relating to 3 years' operation of the plan are as follows: | ||||||||||
| 2013 | 2014 | 2015 | ||||||||
| Annual Service Cost | 16,000 | 19,000 | 26,000 | |||||||
| Settlement Rate & Expected Rate of Return | 10% | 10% | 10% | |||||||
| Actual Return on Plan Assets | 18,000 | 22,000 | 24,000 | |||||||
| Annual Funding (Contributions) | 16,000 | 40,000 | 48,000 | |||||||
| Benefits Paid | 14,000 | 16,400 | 21,000 | |||||||
| Prior Service Cost on 1/1/2014 | 160,000 | |||||||||
| Amortization of Prior Service Costs | 54,400 | 41,600 | ||||||||
| Actuarial Assumption Projected Benefit | ||||||||||
| Obligation Revision as of 12/31/2015 | 520,000 | |||||||||
| (check figure: plan assets balance after year 1 = 220,000; PBO balance after year 2 = (483,300) | ||||||||||
Homework Answers
| Jackson Company | ||||||||||||||
| Pension Worksheet | ||||||||||||||
| Journal Entries | Memo Record | |||||||||||||
| Items | Annual Pension Expense | Cash | OCI-Prior service cost | OCI-Gain/Loss | Pension Assets/Liabilitiy | Projected benefit obligation | Plan Assets | |||||||
| Balance on Jan1,2013 | $ 50,000.00 | Cr | $ 2,50,000.00 | Cr | $ 2,00,000.00 | DR | ||||||||
| Service Cost | $ 16,000.00 | Dr | $ 16,000.00 | Cr | ||||||||||
| Interest Cost=($250000*10%) | $ 25,000.00 | Dr | $ 25,000.00 | Cr | ||||||||||
| Actual Return | $ 18,000.00 | Cr | $ 18,000.00 | Dr | ||||||||||
| Unexpected loss($200000*10%-$18000) | $ 2,000.00 | Cr | $ 2,000.00 | Dr | ||||||||||
| contribution | Dr | $ 16,000.00 | Cr | Cr | $ 16,000.00 | Dr | ||||||||
| Benefits | $ 14,000.00 | Dr | $ 14,000.00 | Cr | ||||||||||
| Journal Entry for 2013 | $ 21,000.00 | Dr | $ 16,000.00 | Cr | $ 2,000.00 | Dr | $ 7,000.00 | Cr | ||||||
| Accumulated OCI(G/L) December 31st,2012 | $ - | $ 7,000.00 | Cr | |||||||||||
| Balance December 31st,2013 | $ 2,000.00 | Dr | $ 57,000.00 | Cr | $ 2,77,000.00 | Cr | $ 2,20,000.00 | DR | ||||||
| Addition prior service cost on 1/1/2014 | $ 1,60,000.00 | Dr | $ 1,60,000.00 | Cr | ||||||||||
| Balance Jan 1.2014 | $ 4,37,000.00 | Cr | ||||||||||||
| Service Cost | $ 19,000.00 | Dr | $ 19,000.00 | Cr | ||||||||||
| Interest Cost=($437000*10%) | $ 43,700.00 | Dr | $ 43,700.00 | Cr | ||||||||||
| Actual Return | $ 22,000.00 | Cr | $ 22,000.00 | Dr | ||||||||||
| Amortization od PSC | $ 54,400.00 | Dr | $ 54,400.00 | Cr | $ 40,000.00 | Dr | ||||||||
| contribution | $ 40,000.00 | Cr | ||||||||||||
| Benefits | $ 16,400.00 | Dr | $ 16,400.00 | Cr | ||||||||||
| Journal entry for 2014 | $ 95,100.00 | Dr | $ 40,000.00 | Cr | $ 1,05,600.00 | Dr | $ - | $ 1,60,700.00 | Cr | |||||
| Accumulated OCI(G/L) December 31st,2013 | $ 2,000.00 | Dr | ||||||||||||
| Balance December 31st.2014 | $ 1,05,600.00 | Dr | $ 2,000.00 | Dr | $ 2,17,700.00 | Cr | $ 4,83,300.00 | Cr | $ 2,65,600.00 | |||||
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