Question

Presented below is information related to Wildhorse Department Stores, Inc. pension plan for 2021. Accumulated benefit obligation (at year-end) $710,000 Service cost 650,000 Funding contribution for 2021 590,000 Settlement rate used in actuarial computation 9% Expected return on plan assets 8% Amortization of PSC (due to benefit increase) 111,000 Amortization of net gains 59,000 Projected benefit obligation (at beginning of period) 580,000 Fair value of plan assets (at beginning of period) 470,000
Compute the amount of pension expense to be reported for 2021.
Pension expense $________
Prepare the journal entry to record pension expense and the employer's contribution for 2021.
Account Titles and Explanation Debit Credit

Answer 1

Answer:

1. Service cost                              $650,000

Interest on projected benefit      $52,200

obligation (580,000)*9%

Expected return on plan             -$37,600

assets ($470,000*8%)

Amortization of PSC                     $111,000

Amortization of Net gains            $59,000

Pension Expenses - 2021           $716,000

General Journal                                       Debit           Credit

Pension Expenses                                 $716,000

Other Comprehensive Income (G/L)    $59,000

       Cash                                                                     $590,000

       Other Comprehensive Income (PSC)                 $111,000

       Pension Asset/Liability                                        $74,600

(To record pension expense and the employer's contribution for 2021)