Question

Waterway Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2017 and 2018.

Prepare a pension worksheet presenting both years 2017 and 2018. (Round answers to 0 decimal places, e.g. 5,125. Enter all amounts as positive.)

Calculate the amortization of the loss (2018) using the corridor approach.

Amortization of the loss $ _______

Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year. (Round answers to 0 decimal places, e.g. 5,125. 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.)

Use only these accounts:

• Accumulated Depreciation
• Accumulated Other Comprehensive Income
• Cash
• Common Stock
• Cost of Goods Sold
• Depreciation Expense
• Interest Expense
• Inventory
• No Entry
• Notes Payable
• Other Comprehensive Income (G/L)
• Other Comprehensive Income (PSC)
• Pension Asset/Liability
• Pension Expense
• Plant and Equipment
• Postretirement Asset/Liability
• Postretirement Expense
• Retained Earnings
• Salary Expense
• Sales

For 2018, indicate the pension amounts reported in the financial statements. (Round answers to 0 decimal places, e.g. 5,125.)

PLEASE SHOW WORK

PLEASE DO ALL PARTS OF THIS AND FOLLOW THE FORMATS ABOVE INCLUDING:

- THE 2017 & 2018 PENSION WORKSHEET (CAN BE COMBINED IN ONE AS SHOWN ABOVE)

- CORRIDOR APPROACH AMORTIZATION OF THE LOSS

- JOURNAL ENTRIES FOR 2017 & 2018

- PARTIAL INC STATEMENT, COMPREHENSIVE INC STATEMENT, PARTIAL BALANCE SHEET - Using accounts listed above only

Thank you in advance!!!!!

2017 $604,100 410,100 2018 Projected benefit obligation, January 1 Plan assets (fair value and market-related value), January 1 Pension asset/liability, January 1 Prior service cost, January 1 Service cost Settlement rate Expected rate of return Actual return on plan assets Amortization of prior service cost Annual contributions Benefits paid retirees Increase in projected benefit obligation due to changes in actuarial assumptions Accumulated benefit obligation at December 31 Average service life of all employees Vested benefit obligation at December 31 194,000 Cr 158,600 40,200 S58,500 10% 10% 10% 10% 35,600 69,500 96,200 31,400 87,400 728,800 61,600 49,600 81,200 56,210 788,900 20 years 459,800 Pension Worksheet 2017 & 2018 General Journal Entries Memo Record Items AnnualDr Pension or Expense Cr?Cash CrService Cost Cr? oci/Gain/Loss Cr? Liability Cr Obligation Cr? Assets Cr? Dr Pension DrProjected Dr or Asset/ o Benefit Planor or OCI Prior or Balance, Jan 1, 2017 Service Cost Interest Cost Actual Return Unexpected loss Amorization of PSC Contributions Benefits Increase in PBO Journal Entry for 2017 Accumulated OCI, Dec 31, 2016 Balance, December 31, 2017 Service Cost Interest Cost Actual Return Unexpected gain Amorization of PSC Amorization of loss Contributions Benefits Journal Entry for 2018 Accumulated OCI, Dec 31, 2017 Balance, December 31, 2018 Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Dec. 31, 2018 Waterway Company Income Statement (Partial) Waterway Company Comprehensive Income Statement Waterway Company Partial Balance Sheet

Answer 1

Waterway COMPANY Pension Worksheet-2017 and 2018 General Entries Memo Record Annual Pension ocI- Prior Service Pension Project Benefit OCI -Gain/Loss Asset/Liabilities Obiligation Plan Assets Items Balance Jan. 1,2017 Service Cost Interest Cost Actual Return Unexpected Loss Amortization of PSC Contributions Benefits Increase in PBO Journal Entry for 2017 Accumulated OCI Dec 31, 2016 Balance Dec 31, 2017 Service Cost Interest Cost Actual Return Unexpected gain Amortization of PSC Amortization of loss Contributions Benefits Expense 194,000 Cr. 604,100 Cr. 40,200 Cr 60,410 Cr 410,100 Dr 40,200 Dr 60,410 Dr 35,600 Cr 5,410 Cr 69,500 Dr 35,600 Dr 5,410 Dr 69,500 Cr 96,200 Cr 96,200 Dr 31,400 C. 31,400 Dr 87,400 Cr 87,400 Dr 56,210 Cr 69,500 Cr. 92,810 Dr 158,600 Dr. 129,100 Dr 96,200 |Cr 89,100 Dr.92,810 Dr 760,710 Cr 58,500 Cr 76,071 Cr 250,210 Cr 510,500 Dr 58,500 Dr 76,071 Dr 61,600 Cr 10,550 Dr 49,600 Dr 837 Dr 61,600 Dr 10,550 Cr 49,600 Cr 837 Cr 81,200 Cr 81,200 Dr 56,210Dr56,210 r 56,210 |Cr 81,200 Cr. Journal Entry for 2018 Accumulated OCI Dec 31, 2017 Balance Dec 31, 2018 133,958 Dr 49,600 Cr.11,387 Cr. 89,100 Dr 39,500 Dr 8,229 Dr 92,810 Dr 81,423 Dr 241,981 Cr 839,071 Cr 597,090 Dr.

Amoritzation of the loss 837 Working Notes 1) Interest Cost (Projected Benefit obligation at the beginning of year * Interest rate) 2017-(604, 100 * 10%) 2018 (760,710 * 10%) 60,410 76,071 Calculation of Unexpected loss/(gain) Expected Return (Plan Assets at the beginning of year Expected Return) 2017 Expected return-410,100 * 1096) Actual Return Unexpected loss 2018 Expected return (510.500 * 1096) Actual Return Unexpected loss/(gain) 41,010 (35,600) 5,410 51,050 (61,600) 10,550) Amortization of loss 2018 Corridor Test Accumulated Net (gain) or loss at the beginning of year 10% of larger of PBO or Plan Assets ie, higher of (760,710 * 10%) or (510,500 * 10%) Amortizable amount 2018 Amortization (16,739/20 years) 92,810 (76,071) 16,739 837

Date General Journal Debit Credit Dec 31, 2017 Pension Expense Other comprehensive Income (G/L Cash Other comprehensive Income (PSC) Pension Assets/Liabilities (to record pension related transactions) 129,100 92,810 96,200 69,500 56,210 133,958 8,229 Dec 31, 2018 Pension Expense Pension Assets/Liabilities Cash Other comprehensive Income (G/L) Other comprehensive Income (PSC) (to record pension related transactions) 81,200 11,387 49,600

Waterway Company Income Statement (Partial) For the Year Ended December 31,2018 Expenses Pension Expense 133,958 Waterway Company Comprehensive Income Statement For the Year Ended December 31, 2018 Net Income Other Comprehensive Income(Loss) Asset gain(loss) Amortization of Loss Prior service cost amortization Comprehensive Income 10,550 837 49,60060,987 XxXx Waterway Company Partial Balance Sheet December 31,2018 Liabilities Pension liability Stockholders' Equity Accumulated other Comprehensive loss (PSC) Accumulated other Comprehensive loss (G/L) $ 241,981 39,500 81,423