Question

At January 1, 2017, Hennein Company had plan assets of $280,000 and a projected benefit obligation of the same amount. During 2017, service cost was $27,500, the settlement rate was 10%, actual and expected return on plan assets were $25,000, contributions were $20,000, and benefits paid were $17,500. Prepare a pension worksheet for Hennein Company for 2017.

Answer 1

Answer:

The Pension schedule is prepared in the workings as requested.

Explanation:

The question is to Prepare a Pension Worksheet for Hennein Company for 2017

HENNEIN COMPANY

PENSION WORKSHEET FOR 2017

General Journal Entry                                                 Memo Record

Item              Pension        Cash           Pension       Defined          Plan

                     Expenses                         Asset/Liab    Benefit          Assets

                                                                                      Obligation

Jan 1, 2017                                                               280,000 CR  280,000 Dr

Service Cost  27,500 DR                                        27,500 CR

interest Cost  28,000 DR                                        28,000 CR                

Actual return  25,000 CR                                                                25,000 DR

Contributions                      20,000 CR                                           20,000 DR

Benefits                                                                    17,500 DR       17,500 CR

Journal Entry 30,500 DR    20,000 CR 10,500 CR

Dec. 31, 2017                                         10,500 CR  318,000 CR 307,500 DR

Note that the interest cost is as follows

280,000 x 10% = $28,000