Question

Problem 9 On January 15, 2018 United Company provides the following information related to its pension plan for the year ending December, 31, 2018 200,000 Plan assets, 1/1/2018 Annual service cost ... 60,000 Settlement rate .............. 10% 200,000 40,000 Projected benefit obligation, 1/1/2018 ......... Funding contributions during 2018 .. Benefits paid to retirees during 2018 ... Plan assets, 12/31/2018 30,000 250,000 Prepare a journal entry on 12/31/2018 to record pension expense for 2018

Answer 1

Answer is attached below

Answer Calculation of Pension Expense Service Cost Interest Cost Less: Actual Returns Pension Expense Amount ($) 60,000 20,000 (40,000) 40,000 Calculation of Interest Cost Projected benefit obligation on 1/1/2018 * Settlement Rate 200,000*10% $20,000

Calculation of Actual Return Let Actual Return bex Plan Assets on 1/1/2018 + Actual Return + Contributions - Benefits Paid = Plan Assets on 12/31/2018 200,000 + x +40,000 - 30,000 = 250,000 x = 250,000 - 210,000 x = 40,000 Therefore, Actual Return = $40,000 Journal Entry to record pension expense Account Title Debit ($) Credit ($) 40,000 Pension Expense Cash 40,000