Question

Part II: The following defined pension data of EPA Corporation apply to the year 2017 5,200,000 5,180,000 PBO, January 1, 2017 (before amendment) Plan assets, January 1, 2017 On January 1, 2017, through plan amendment, prior service benefits granted having a PV of Settlement & expected return rate Service cost Contributions (funding) Actual return on plan assets Benefits paid to retirees Average service life of all covered employees in years 215,000 9% 255,000 388,000 429,000 420,000 10 INSTRUCTIONS: 1. For 2017, prepare a pension worksheet that shows the journal entry for pension expense and the year-end balances in the related pension accounts. 2. Prepare the journal entry for pension expense for 2017.

Answer 1

Annual pension expense OCI-Prior service cost Cash Plan assets $ 51,80,000.00 Projected OCI Pension benefit Gain/Loss Jasset/Liabilities Obligation $ 20,000.00 $ 52,00,000.00 $ 2,15,000.00 $ 54,15,000.00 $ 2,55,000.00 $ 4,87,350.00 $ 2,15,000.00 Particulars Balance Dec 31, 2016 Prior service cost Balance Jan 1, 2017 Service cost Interest cost Actual return Unexpected Loss Contributions Benefits Journal Entry for 2017 Accumulated OCI Dec 31, 2016 Balance Dec 31, 2017 $ 2,55,000.00 $ 4,87,350.00 $ 4,29,000.00 $ 37,200.00 $ 4,29,000.00 $ 37,200.00 $ 3,88,000.00 $ 3,88,000.00 $ 4,20,000.00 $ 4,20,000.00 | $ 2,76,150.00 $3,88,000.00 $2,15,000.00 $ 37,200.00 $ 1,40,350.00 $ 2,15,000.00 $ 37,200.00 $ 1,60,350.00 $57,37,350.00 $ 55,77,000.00 Projected benefit oblgation as on 1/1/17 Interest rate Interest cost $ 54,15,000.00 0.09 $ 4,87,350.00 Expected return Less: Actual return Unexpected loss/(gain) $ 4,66,200.00 $ -4,29,000.00 $ 37,200.00 CR Journal entry Particulars Pension expense Other Comprehensive income (PSC) Other Comprehensive income- (G/L) Cash Pension assets/liabilities To record the pension related amount DR $ 2,76,150.00 $ 2,15,000.00 $ 37,200.00 $ 3,88,000.00 $ 1,40,350.00