Question

Exercise 20-10 (Part Level Submission) Novak Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan. Plan assets Projected benefit obligation Pension asset/liability Accumulated OCI (PSC) $469,800 607,000 137,200 97,100 Dr. As a result of the operation of the plan during 2017, the following additional data are provided by the actuary. Service cost $91,100 Settlement rate, 8% Actual return on plan assets Amortization of prior service cost Expected return on plan assets 54,400 19,100 51,600 Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions Contributions Benefits paid retirees 79,700 99,500 85,800

Answer 1

Novak Corp. Pension Worksheet General Entries Memo Record Project Benefit Obiligation 607,000 Cr 91,100 Cr 48,560 Cr Pension Annual Pension OCI Prior OCI-Gain/Loss Asset/Liabilities 137,200 Cr Cash Service Cost Plan Assets Items Expense Balance Jan.1,2017 469,800 Dr 91,100 Dr. 48,560 Dr. 54,400 Cr. Service Cost Interest Cost 54,400 Dr. Actual Return 2,800 Dr. 19,100 Dr. 2,800 Cr. Unexpected gain Amortization of PSC 19,100 Cr. Liability Increase 79,700 Dr. 79,700 Cr 99,500 Cr. 99,500 Dr. Contributions 85,800 Dr. 85,800 Cr. Benefits 107,160 Dr. 76,900 Dr. 99,500 Cr 19,100 Cr 65,460 Cr Journal Entry for 2017 97,100 Dr. Accumulated OCI Dec 31, 2016 76,900 Dr. 78,000 Dr. 202,660 Cr. 740,560 Cr 537,900 Dr Balance Dec 31, 2017 Working Notes 1) Interest Cost (Project Benefit obligation at the beginning of year x Settlement rate) (607,000 x 8%) 48,560 2) Unexpected gain Actual Return 54,400 (51,600) Less: Expected return Unexpected gain 2,800