Question

Sweet Corp. sponsors a defined benet pension plan for its employees. On January 1, 2020, the following balances related to this plan Plan assets (market-related value Prajected benefit obligation Pension asset/liability Prior service cost Nct gain or loss (dcbit) $522,000 738,000 216,000 Cr. 83,000 99,000 As a result of the aperation of the plan during 2020, the actuary provided the following additional data for 2020 $97,000 Service cost Settlement rate, 9%, expected retumrate, 10% Actual return on plan assets Amortization of prior service cost Contributions Benefits pald retirees Average remaining service life of active employees 46,000 26,000 124,000 85,000 10 years Using the preceding data, compute pension expense for Sweet Corp. for the year 2020 by preparing a pension worksheet that shows the journal entry for pension expense. (Enter all amounts as positive! SWEET CORP. Pension Worksheet-2020 General Journal Entries OCI-Prior OCI-Gain/ Service Cost Memo Annual Pension Expense Penison Asset/ Liability Projected Benefit Obligation Items Balance, Jan, 1.2020 Service cost Interest cost Actual return Unexpected loss Amortization of PSC .......... Amortization of loss Contributions Benefits Journal entry for 2020 Accumulated OCI, Dec 31, 2019 Balance, Dec 31, 2020 Use the market-related asset value to compute the expected return and for corridor amortization Expected return Corridor amortization $

Answer 1

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The below table is self explanatory. All inputs are standardized and based on numbers given with questions: Solution: Problem 20-7: Annual Expense General Journal Entries OCI—Prior Oci–Gain/ Service Cost Loss Cash Pension Asset/ Liability 216000 Cr. Memo Record Projected Obligation Assets 738000 Cr. 522000 Dr. 97000 Cr. 66420 Cr. 46000 Dr. Items Balance, Jan. 1, 2020 Service cost Interest cost-9% of Beg PBO Actual return Unexpected Loss (52200-46000) Amortization of PSC Amortization of loss Contribution Benefits Journal entry for 2020 Accumulated OCI, Dec.31,2019 Balance, Dec. 31, 2020 97000 Dr. 66420 Dr. 46000 Cr. 6200 Cr. 26000 Dr. 6200 Dr. 26000 Cr. 2520 Cr. 2520 Dr. 124000 Cr. 124000 Dr. 85000 Cr. 85000 Dr. 137220 Dr. 124000 Cr. 9100 Dr. 26000 Cr. 83000 Dr. 57000 Dr. 3680 Dr. 99000 Dr. 102680 Dr. 206900 Cr 813900 Cr. 607000 Dr.

a) Expected Return (522000*10%) $ 52,200 Corridor Amortization: (Corridor is taken 10% of larger of PBO or Plan asset amount): $ 2,520 Beginning Beginning 10% Accm. Minimum PBO Plan assets Corridor OCI, Beg. Difference Amortization 738000 522000 73800 99000 25200 $ 2,520 25200/10) period