Question

Exercise 20-12 Windsor 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, 2017 Projected benefit obligation Market-related and fair value of plan assets Accumulated benefit obligation Accumulated OCI (G/L)-Net gain January 1, 2017 $1,525,000 794,000 1,605,000 0 December 31, 2017 $1,553,000 1,124,400 1,724,400 (202,500) The service cost component pension expense for employee services rendered in the current year amounted to $78,000 and the amortization of prior service cost was $119,400. The company's actual funding (contributions) of the plan in 2017 amounted to $251,000. 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 $1,194,000 on January 1, 2017. Assume no benefits paid in 2017. Determine the amounts of the components of pension expense that should be recognized by the company in 2017. (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 SHOW LIST OF ACCOUNTS Prepare the journal entry to record pension expense and the employer's contribution to the pension plan in 2017. (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 o for the amounts.) Account Titles and Explanation Debit Credit (To record pension expense and employer's contribution)

Answer 1

Answer:
1)
Components of Pension Expense
Service Cost	$78,000
Interest on Projected Benefit Obligation ($1,525,000 x 10%)	$ 152,500
Expected return on Plan Assets ( $ 794,000 x 10%)	($ 79,400)
Amortization of Prior service cost	$ 119,400
Pension Expense	$ 270,500
2)
Accounts Titles and Explanation	Debit (in $)	Credit (in $)
Pension Expense	$ 270,500
Pension Asset / Liability   - Bal. Fig.	$ 302,400
Cash		$ 251,000
Other comprehensive Income - Prior service Cost		$ 119,400
Other comprehensive Income - (G / L)		$ 202,500
(To record pension expense and employer’s contribution)