Question

Tamarisk Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2020 and 2021. 2020 2021 Projected benefit obligation, January 1 $602,200 Plan assets (fair value and market-related value), January 1 411,200 Pension asset/liability, January 1 191,000 Cr. Prior service cost, January 1 159,200 Service cost 39,800 $58,700 Settlement rate 10 % 10 % Expected rate of return 10 % 10 % Actual return on plan assets 36,400 60,500 Amortization of prior service cost 69,800 50,400 Annual contributions 97,100 81,800 Benefits paid retirees 31,600 53,520 Increase in projected benefit obligation due to changes in actuarial assumptions 87,000 0 Accumulated benefit obligation at December 31 716,100 787,400 Average service life of all employees 20 years Vested benefit obligation at December 31 464,900

1. Prepare a pension worksheet presenting both years 2020 and 2021. 2. Calculate the amortization of the loss (2021) using the corridor approach. Amortization of the loss $ 3. Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) For 2021, indicate the pension amounts reported in the financial statements. (Round answers to 0 decimal places, e.g. 5,125.) Tamarisk Company Income Statement (Partial) December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021 DividendsOperating ExpensesNet Income / (Loss)Retained Earnings, January 1, 2021Retained Earnings, December 31, 2021RevenuesTotal ExpensesTotal RevenuesOther Income / Expenses     Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Pension Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)     $ DividendsOperating ExpensesNet Income / (Loss)Retained Earnings, January 1, 2021Retained Earnings, December 31, 2021RevenuesTotal ExpensesTotal RevenuesOther Income / Expenses Amortization of LossAsset Gain (Loss)Comprehensive Income (Loss)Liability Gain (Loss)Pension ExpensePrior Service Cost AmortizationOther Comprehensive Income (Loss) $ Tamarisk Company Comprehensive Income Statement December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021 DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, 2021Retained Earnings, December 31, 2021RevenuesTotal ExpensesTotal Revenues $ XXX Amortization of LossAsset Gain (Loss)Comprehensive Income (Loss)Liability Gain (Loss)Pension ExpensePrior Service Cost AmortizationOther Comprehensive Income (Loss)     Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Pension Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)     $     Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Pension Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)         Amortization of Loss    Asset Gain (Loss)    Comprehensive Income (Loss)    Liability Gain (Loss)    Pension Expense    Prior Service Cost Amortization    Other Comprehensive Income (Loss)     $ Amortization of LossAsset Gain (Loss)Comprehensive Income (Loss)Liability Gain (Loss)Pension ExpensePrior Service Cost AmortizationOther Comprehensive Income (Loss) $ XXX Tamarisk Company Partial Balance Sheet December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021 AssetsLiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity     Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Pension Liability    Retained Earnings     $ AssetsLiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity     Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Pension Liability    Retained Earnings     $     Accounts Payable    Accounts Receivable    Accumulated Depreciation    Accumulated Other Comprehensive Income (G/L)    Accumulated Other Comprehensive Loss (G/L)    Accumulated Other Comprehensive Income (PSC)    Accumulated Other Comprehensive Loss (PSC)    Common Stock    Pension Liability    Retained Earnings

Answer 1

Tamrisk COMPANY Pension Worksheet - 2020 and 2021 General Entries OCI - Prior Service Cash Cost OCI -Gain/Loss Annual Pension Expense Pension Asset/Liabilities 191,000 Cr. Memo Record Project Benefit Obiligation Plan Assets 602,200 Cr. 411,200 Dr. 39,800 Cr. 60,220 Cr. 36,400 Dr. 39,800 Dr. 60,220 Dr. 36,400 Cr. 4,720 Cr. 69,800 Dr. 4,720 Dr. 69,800 Cr. 97,100 Cr. 97,100 31,600 Cr. 100 Dr. 31,600 Dr. 87,000 Cr. 87,000 Dr. 91,720 Dr. 128,700 Dr. 97,100 Cr. 53,520 Cr. Items Balance Jan.1, 2020 Service Cost Interest Cost Actual Return Unexpected Loss Amortization of PSC Contributions Benefits Increase in PBO Journal Entry for 2020 Accumulated OCI Dec 31, 2019 Balance Dec 31, 2020 Service Cost Interest Cost Actual Return Unexpected gain Amortization of PSC Amortization of loss Contributions Benefits Journal Entry for 2021 Accumulated OCI Dec 31, 2020 Balance Dec 31, 2021 69,800 Cr. 159,200 Dr. 89,400 Dr. 91,720 Dr. 244,520 Cr. 513,100 Dr 757,620 Cr. 58,700 Cr. 75,762 Cr. 60,500 Dr. 58,700 Dr. 75,762 Dr. 60,500 Cr. 9,190 Dr. 50,400 Dr. 798 Dr. 9,190 Cr. 50,400 Cr. 798 Cr. 81,800 Cr. 81,800 Dr. 53,520 Cr. 53,520 Dr. 134,350 Dr. 81,800 Cr. 7,838 Dr. 50,400 Cr. 89,400 Dr. 39,000 Dr. 9,988 Cr. 91,720 Dr. 81,731 Dr. 236,682 Cr. 838,562 Cr. 601,880 Dr. Amoritzation of the loss 798

Working Notes: 1) Interest Cost = (Projected Benefit obligation at the beginning of year x Interest rate) 2020 = (602,200 ~ 10%) 60,220 2021 = (757,620 x 10%) 75,762 Calculation of Unexpected loss/(gain) Expected Return = (Plan Assets at the beginning of year x Expected Return) 2020 Expected return = (411,200 x 10%) 41,120 Actual Return (36,400) Unexpected loss 4,720 2021 Expected return = (513,100 x 10%) 51,310 Actual Return (60,500) Unexpected loss/(gain) (9,190) 91,720 Amortization of loss 2021 Corridor Test Accumulated Net (gain) or loss at the beginning of year 10% of larger of PBO or Plan Assets i.e. higher of (757,620 x 10) or (513,100 x 10%) Amortizable amount 2021 Amortization (15,958 / 20 years) (75,762) 15,958 798

Date Account Titles and Explanation Debit Credit 128,700 91,720 Dec.31 ,2020 Pension Expense Other comprehensive Income -G/L Cash Other comprehensive income - PSC Pension Assets/Liabilities 97,100 69,800 53,520 134.350 7,838 Dec.31,2021 Pension Expense Pension Assets/Liabilities Cash Other comprehensive income - PSC Other comprehensive Income -G/L 81,800 50,400 9,988

Tamrisk Company Income Statement (Partial) For the Year Ended December 31,2021 Expenses Pension Expense 134,350 $ XXXX Tamrisk Company Comprehensive Income Statement For the Year Ended December 31, 2021 Net Income Other Comprehensive Income(Loss) Asset gain(loss) 9,190 Amortization of Loss 798 Prior service cost amortization 50,400 Comprehensive Income 60,388 $ XXXX Tamrisk Company Partial Balance Sheet December 31,2021 Liabilities Pension liability Stockholders' Equity Accumulated other Comprehensive loss (PSC) Accumulated other Comprehensive loss (G/L) $ 236,682 $ 39,000 81,731