Question

The following information applies to Riddle Corp.'s defined benefit pension plan for the current year: $ 600,000 540,000 60,000 150,000 Projected benefit obligation January 1 (before amendment) Plan assets January 1 Pension Asset/Liability, January 1-credit balance Present value of increase in service benefits effective January 1 because of an amendment in the pension plan (not included in the projected benefit obligation above) Settlement rate Contributions to the plan (funding) Service Cost Actual and expected return on plan assets Benefits paid to retirees Prior service cost amortization for the current year 8% 50,000 70,000 55,000 30,000 15,000

Answer 1

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Solution: Naming convention is not available, can be slightly different: There are two ways of presenting Pension expense JE, shown as below: Event Credit Account title and explanation Pension expense (750000*8%)+(70000)+(15000)-(55000) Plan assets (Expected return on assets) PBO (750000*8%)+(70000)+(15000) (To record the pension expense) Debit 90000 55000 145000 OR: Event Credit Debit 90000 Account title and explanation Pension expense (750000*8%)+(70000)+(15000)-(55000) Pension Asset / Liability (plug) Cash Other comprehensive income - PSC (To record the pension expense) 25000 50000 15000