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At the end of 2019, the balances in the accounts related to the defined benefit pension...

At the end of 2019, the balances in the accounts related to the defined benefit pension plan of the Warren Company were as follows:                                      
                                      
       Projected benefit obligation                           1,320,000  
       Unrecognized prior service cost (remainder to be amortized over 12 years)                             110,000  
       Unrecognized net loss                            192,000  
       Plan assets (at fair value)                            1,047,500  
                                      
On 1/1/20, Warren amended the plan to provide an increased amount of pension benefits; the prior service cost resulting from this                                       
amendment was $70,000. At 1/1/20, the average remaining service life of employees expected to receive benefits was 12 years.                                      
                                      
The following information relates to the year 2020:                                      
                                      
   Service Cost                   175,500              
   Settlement rate                    7%              
   Expected rate of return on plan assets                   6%              
   Plan contribution (at year-end)                   158,000              
   Benefit payments to retirees (at year-end)                   135,000              
                                      
In 2020, Warren’s actual return on plan assets was $75,000. Warren follows a policy of recognizing gains/losses on a delayed basis                                      
using the "corridor approach". At the end of 2020, there was one change in the estimates and assumptions relating to computation of the                                       
projected benefit obligation, resulting in a decrease in the PBO of $35,000.                                       
                                      
                                      
Required:                                      
a.   Prepare Warren’s pension worksheet, and prepare the journal entry that Warren would make to record the expense calculated.                                    
b.   Prepare the pension note required for the 12/31/20 financial statements.

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Answer #1

Pension accounting for the year ended 2020

Year 2020 1 Pension Expense $ 2,19,216.67 2 Journal entry 2020 Account title & Explaination Debit Credit Annual pension expen

Items Plan Asset 10,47,500 Balance, Jan 1,2020 , Past Service Cost created Service Cost Interest Cost Actual return Unexpecte

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