Question

Bonita Company provides the following information about its defined benefit pension plan for the year 2020. Service cost $88,500 Contribution to the plan 107,100 Prior service cost amortization 10,600 Actual and expected return on plan assets 63,100 Benefits paid 40,800 Plan assets at January 1, 2020 648,000 Projected benefit obligation at January 1, 2020 688,100 Accumulated OCI (PSC) at January 1, 2020 148,600 Interest/discount (settlement) rate 11 %. Prepare the journal entry recording pension expense.

Answer 1

Answer:

Journal Entry

Debit Pension Expense $111,691 Credit Bank $111,691

Explanation:

Computation of Pension expense

Service cost                             $88,500

Service cost amortization      $10,600

Return on Plan asset           - $63,100

Interest on liability                 $75,691

(688,100*11%)

Pension Expense                 $111,691