Abbott and Abbott has a noncontributory, defined benefit pension
plan. At December 31, 2018, Abbott and Abbott received the
following information:
Projected Benefit Obligation | ($ in millions) | ||||
Balance, January 1 | $ | 100 | |||
Service cost | 21 | ||||
Interest cost | 10 | ||||
Benefits paid | (10 | ) | |||
Balance, December 31 | $ | 121 | |||
Plan Assets | |||||
Balance, January 1 | $ | 80 | |||
Actual return on plan assets | 10 | ||||
Contributions 2018 | 21 | ||||
Benefits paid | (10 | ) | |||
Balance, December 31 | $ | 101 | |||
The expected long-term rate of return on plan assets was 10%. There
was no prior service cost and a negligible net loss–AOCI on January
1, 2018.
Required:
1. Determine Abbott and Abbott’s pension expense
for 2018.
2. Prepare the journal entries to record Abbott
and Abbott’s pension expense, funding, and payment for 2018.
Complete this question by entering your answers in the tabs below.
Prepare the journal entries to record Abbott and Abbott’s pension expense, funding, and payment for 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
No | Event | General Journal | Debit | Credit |
---|---|---|---|---|
1 | 1 | Plan assets | not attempted | not attempted |
Pension expense | not attempted | not attempted | ||
PBO | 31 | |||
2 | 2 | Plan assets | 21 | |
Cash | 21 | |||
3 | 3 | PBO | 10 | |
Plan assets | 10 |
Answer | |
Answer 1 | 1. Determine Abbott and Abbott’s pension expense for 2018. |
Service cost $21 | |
Interest cost $10 | |
Expected return on plan assets($80x10%) ($8) | |
Pension Expense $41 | |
Answer 2 | 2. Prepare the journal entries to record Abbott and Abbott’s pension expense, funding, and payment for 2018. |
Dr Pension expense A/c $41 | |
Dr Plan Assets A/c $8 | |
Cr PBO A/c $49 | |
Dr Plan assets A/c $21 | |
Cr Cash A/c $21 | |
Dr PBO A/c $10 | |
Cr Plan assets A/c $10 | |
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