Question

On January 1, 2017, Sarasota Company has the following defined benefit pension plan balances. Projected benefit obligation Fair value of plan assets $4.434,000 4,230,000 2018, the company amends its pension agreement so that prior service costs of $492,000 are created. Other data related to the pension plan are as follows The interest (settlement) rate applicable to the plan is 10%. On January 2017 2018 $150,000 cost amortization 90.000 Contributions (funding) to the plan 242,000 285,000 Benefits paid 203.000 281,000 Actual return plan assets 253,800 256,000 Expected rate of return on assets 6% Prepare a pension worksheet r the pension plan for 2017 and 2018. (Enter all amounts as positive.) SARASOTA COMPANY General JoCl 2017 and 2018 Memo Record пеs Annual Pension OCI-Prior OCI-Gain/ Pension Asset/ Liability Projected Benefit Obligation Plan Cash Service Cost Assets Items Expense Loss Balance, Jan. 2017 Service cost Interest cost T Actual return T Contributions Benefits Joumal entry r2017 T Accumulated OCI. Dec. 31, 2016 Balance, Dec. 31, 2017 Additional PSC, 1/1/2018 Balance, Jan 2018 Service cost T T Interest cost T Actual return Unexpected loss Amortization of PSC T Contributions Benefits Joumal entry 2018 T T Accumulated OCI. Dec. 31, 2017 Balance, Dec. 31, 2018 For 2019, prepare the journal entry to record pension-related amounts. (Credit account titles are automaticlly indented when amount is entered. I o not indent manually. r the account titles and enter 0 for the amounts.) f no entry is required, select No Entry Account Titles and Explanation Debit Credit

Answer 1

SARASOTA COMPANY Pension Worksheet 2017 and 2018 Memo Record General Entries OCI Prior Service Annual Pension Pension Project Benefit Asset/Liabilities oCI-Gain/Loss Cash Cost Obiligation 4,434,000 Cr. 150,000 Cr 443,400 Cr. Plan Assets Items Expense Balance Jan.1,2017 204,000 Cr. 4,230,000 Dr 150,000 Dr. Service Cost 443.400 Dr. Interest Cost Actual Return 253,800 Cr. 253,800 Dr. Contributions 242,000 Cr. 242,000 Dr. 203,000 Dr. Benefits 203,000 er 339,600 Dr. 242,000 Cr. 97,600 Cr. Journal Entry for 2017 Accumulated OCI Dec 31, 2016 4,824,400 Cr. 4,522,800 Dr Balance Dec 31, 2017 301,600 r 492,000 Dr. 492.000 Cr Additional PSC, 1/1/2018 Balance Jan 1, 2018 5,316,400 Cr. 184,000 Dr. 531.640 Dr. 184,000 Cr 531,640 Cr Service Cost Interest Cost 256,000 Cr. 256,000 Dr Actual Return 105,824 Cr. 105,824 Dr. Unexpected Loss Amortization of PSC 90.000 Cr. 90,000 Dr. 285,000 Cr Contributions 285,000 Dr Benefits 281,000 Dr. 281.000 Cr, 285.000 Cr. 443,816 Dr. 402,000 Dr. 105.824 Dr. 666,640 Cr. Journal Entry for 2018 Accumulated OCI Dec 31, 2017 105,824 Dr. 968,240 Cr. 5,751,040 Cr. 4,782,800 Dr. 402,000 Dr. Balance Dec 31, 2018 lai

Working Notes: 1) Interest Cost (Projected Benefit obligation at the beginning of year x Interest rate) 2017 (4,434,000 x 10 % ) 443,400 2018 (5,316,400 x 10 % ) 531,640 2) Unexpected Loss (Expected Return Actual Return) = Expected Return (Plan Assets at the beginning x Expected Return) Expected Return = (4,522,800 x 8 % ) - 361,824 Actual Return (256,000) Unexpected loss 105,824 b) Journal Entry for 2018 Account Titles and Explanation Credit Debit Annual Pension Expense 443,816 OCI Prior Service Cost 402,000 ocI -Gain/Loss 105,824 Cash 285,000 Pension Asset/Liabilities 666,640 (to record the pension related amounts)