Question

Preparing a pension work sheet. The accountant for Marlin Corporation has 'developed the following information for the company's defined-benefit pension plan for 2018: . Service cost Actual return on plan assets Annual contribution to the plan Amortization of prior service cost Benefits paid to retirees Settlement rate Expected rate of return on plan assets $1,000,000 500,000 1,840,000 250,000 120,000 10% 8% The accumulated benefit obligation at December 31, 2018, amounted to $6,500,000. Instructions (a) Using the above information for Marlin Corporation, complete the pension work sheet for 2018. Indicate (credit) entries by parentheses. Calculated amounts should be supported. (b) Prepare the journal entry to reflect the accounting for the company's pension plan for the year ending December 31, 2018.

Answer 1

Answer

Negative sign indicates Credits Positive Sign Indicates Debits Annual Pension Expense OCi-Prior Service Cost ected ocI Gain ILoss Penslon Benefit Asset'Liability Items Cash Obligation Plan assets (2,000,000) Cr (7,000,000) . 5,000,000 Dr. Balance, Jan. 1, 2018 Service cost Interest cost (settlement rate PBO x 10% Actual Return Unexpected Loss igain (Beginning Planned Assets x 8% . Actual Return) Amortization of PSC Amorization of net gain or loss-AOC Contributions Benefits Decreaselincrease in PBO-(actuarial gain Balancing Figure) ournal Accumulated OCI, Dec.2017 Balance Dec. 2018 1,000,000 Dr 700,000 Dr (500,000) Cr (1,000,000) Cr 700,000)Cr 500,000 Dr 100,000 Dr. 260,000 Dr (100,000) Cr 250 Cr Dr 1,840,000)l Cr. 1,840,000 Dr 120,000 Dr.(120,000) Cr 2,080,000) Cr 2180,000)r. 2720,000 Dr 2,080,000 Dr. for 2018 1,660,000 Dr (1,840,000) Cr 260,000) Cr 1,500,000 Dr 1,260,000 Dr 2,180,000) Cr 2.180,000) 720,000 Dr (6,600,000) Cr. 7,220,000 Dr 2018 1, Journal entry for entries) to record all pension effects for 2018 Check7 Check 720,000 Account tite & explanation Deblt credit Pension expense Pension Asset/ Liability Cash Other comprehensive income(G/L) Other comprehensive income(PSC 1.550,000 2,720,000 1,840,000 2,180,000 250,000