Question

Ayayai Company received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension plan for the year ended December 31, 2020. January 1, 2020 December 31, 2020 Projected benefit obligation $1,499,000 $1,527,000 Market-related and fair value of plan assets 802,000 1,127,200 Accumulated benefit obligation 1,622,000 1,742,500 Accumulated OCI (G/L)—Net gain 0 (199,900 ) The service cost component of pension expense for employee services rendered in the current year amounted to $78,000 and the amortization of prior service cost was $120,500. The company’s actual funding (contributions) of the plan in 2020 amounted to $245,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,205,000 on January 1, 2020. Assume no benefits paid in 2020.

Determine the amounts of the components of pension expense that should be recognized by the company in 2020. (Enter amounts that reduce pension expense with either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).) components of pension expense service cost $???? interest on projected benefit obligation ? expected return on plan assets ? amortization of prior service cost ? ? Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2020. (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.) account titles and explanation debit credit ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? (to record pension expense and employer's contribution) Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Ayayai Company for the year 2020. Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Ayayai Company for the year 2020. Ayayai Company Income Statement (Partial) For the Year Ended December 31, 2020 Ayayai Company Comprehensive Income Statement $XXXX $ $XXXX Ayayai Company Balance Sheet (Partial) Click if you would like to Show Work for this question: Open Show Work

Answer 1

Pension scheme: The National pension system has formed to provide retirement benefits for the employees during their employment period. It is also defined as “Benefit plan" where a fixed amount is paid to the person regularly or a "contribution plan" where a fixed amount is invested and become available at retirement age.

1 Answer: 2 Partl: 3 pension expense for 2020 composed of the following amount (S) 4 service cost 78,000 5 interest on project benefit obligation(1,499,000*10%) 1.49,9001 6 amortization of prior service cost 1,20,500 7 expected return on plan assets (802.000*10%) -80,2001 8 pension expense 2,68,200 9 10 part2: 11 journal entry to record pension expense and the emplovers contribution: 12 account titles and explanation debit(S) credit() 13 pension asset/ liability (Bal. fig) 2,97,200 14 pension exp 2,68,200 15 cash 2,45,000 16 other comprehensive income (Psc) 1,20,500 17 other comprehensive income (net gain) 1,99,900 18 19 part3: 20 partial income statement and balance sheet for the year 2020 21 Avayai company income statement (partial) for the year ended dec 31,2020 22 Expenses Amount() 23 Pension Expense 2.68,200 24 Avayai company income statement (partial) for the year ended dec 31,2020 25 Net Income (Loss) S XXX 26 other comprehensive Income 27 Amortization of PSC S 120,500 28 Accumulated OCI (gain/loss) $ 199,900 29 Comprehensive income S XXX 30

1 Avayai company balance sheet (partial) as on december 31, 2020: 2 long term liabilities: amount (S) 3 Pension Liability {(14,99.000 - 802.000) - 297,200} 3,99,800 4 s Stockholders equity: 6 Accumulated other comprehensive income (PSC) -3,20,400 7 (120,500 + 199.900) 8

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