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Using the information in E20-2, prepare a pension worksheet inserting January 1, 2017, balances, showing December 31, 2017, balances, and the journal entry recording pension expense.

Short Answer

Expert verified

A pension Worksheet is the kind of pension statement which includes all of the organization's necessary information related to the defined benefit pension plans. This worksheet recordsthe pension expense entries in the journal book.

Step by step solution

01

Computation of Pension Worksheet as of January 1, 2017.

Veldre Company
Pension Worksheet for the year 2017
General Journal Entries
Memo Record

Particulars

Annual pension expense

Cash

OCI prior service cost

Pension asset/liability

Projected benefit obligation

Plan Assets

Balance Jan 1, 2017

$60,000 Cr.

$700,000 Cr.

$640,000 Dr.

Service cost

$90,000 Dr.

$90,000 Cr.

Interest cost

$700,000×10%

$70,000 Dr.

$70,000 Cr.

Actual return

$64,000 Cr.

$64,000 Dr.

Amortization of PSC

$10,000 Dr.

$10,000 Cr.

Contributions

$105,000 Cr.

$105,0000 Dr.

Benefits

$40,000 Dr.

$40,000 Cr.

Journal entry for 2017

$106,000 Dr.

$105,000 Cr.

$10,000 Cr.

$9,000 Dr.

Accumulated OCI Dec 31, 2016

$150,000 Dr.

Balance Dec 31, 2017

$140,000 Dr.

$1,000 Cr.

$820,000 Cr.

$769,000 Dr.

02

Journal entry for recording the transaction of pension expense for the year 2017.

Veldre Company
Journal Entry

Date

Particulars

Debit

Credit

2017

Pension Expense

$106,000

Pension Asset/Liability

$9,000

Other comprehensive income

$10,000

Cash

$105,000

(To record the pension expense)

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Most popular questions from this chapter

Differentiate between “accounting for the employer” and “accounting for the pension fund.”

The following data relate to the operation of Kramer Co.’s pension plan in 2018. The pension worksheet for 2017 is provided in P20-10. Service cost $59,000 Actual return on plan assets 32,000 Amortization of prior service cost 28,000 Annual contributions 51,000 Benefits paid retirees 27,000 Average service life of all employees 25 years For 2018, Kramer will use the same assumptions as 2017 for the expected rate of returns on plan assets. The settlement rate for 2018 is 10%. Instructions (a) Prepare a pension worksheet for 2018 and accompanying computations and amortization of the loss, if any, in 2018 using the corridor approach. (b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31. (c) Indicate the pension amounts reported in the financial statements.

Tevez Company experienced an actuarial loss of \(750 in its defined benefit plan in 2017. For 2017, Tevez’s revenues are \)125,000, and expenses (excluding pension expense of \(14,000, which does not include the actuarial loss) are \)85,000. Prepare Tevez’s statement of comprehensive income for 2017.

Question: The following defined pension data of Doreen Corp. apply to the year 2017.

Defined benefit obligation, 1/1/17 (before amendment) $560,000

Plan assets, 1/1/17 546,200

Pension asset/liability 13,800 Cr.

On January 1, 2017, Doreen Corp., through plan amendment,

grants past service benefits having a present value of 120,000

Discount rate 9%

Service cost 58,000

Contributions (funding) 65,000

Actual return on plan assets 49,158

Benefits paid to retirees 40,000

Instructions

For 2017, prepare a pension worksheet for Doreen Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.

For 2017, Sampsell Inc. computed its annual postretirement expense as \(240,900. Sampsell’s contribution to the plan during 2017 was \)180,000. Prepare Sampsell’s 2017 entry to record postretirement expense, assuming Sampsell has no OCI amounts.

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