ACCT 557 Week 3 Discussion Problem 20-1

 ACCT 557 Intermediate Accounting III

(DeVry Keller - Winter 2016)

E20-1 (Pension Expense, Journal Entries)

The following information is available for the pension plan of Radcliffe Company for the year 2014.

Actual and expected return on plan assets                   15,000

Benefits paid to retirees                                                                   40,000

Contributions (funding)                                                                    90,000

Interest/discount rate                                                                        10%

Prior service cost amortization                                                     8,000

Projected benefit obligation, January 1, 2014                           500,000

Service cost                                                                                          60,000

Instructions

(a)Compute pension expense for the year 2014. 

(b)Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014.