Answer:
(a) $493,200
Explanation:
(a) Pension expense to be reported in 2018:
= Service cost + Interest on projected benefit obligation - Expected return on plan assets + Amortization of prior service cost
= $137,500 + ($2,480,000 × 9%) - (1,150,000 × 9%) + $236,000
= $137,500 + $223,200 - $103,500 + $236,000
= $493,200
(b) The journal entry is as follows:
Pension expenses A/c Dr. $493,200
Pension Asset/ Liability A/c Dr. $242,800
To cash $500,000
To Other comprehensive income $236,000
(To record the pension expense and the employer's contribution to the pension plan)
