WEEK 5 TEXTBOOK PROBLEM 20-1

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PROBLEMS
 
P20-1.  
 
(2-Year Worksheet)
 
 
 
 
On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.
Projected benefit obligation
$4,500,000
Fair value of plan assets
 4,200,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its pension agreement so that prior service costs of $500,000 are created. Other data related to the pension plan are as follows.
 
2014
2015
Service cost
$150,000
$180,000
Prior service cost amortization
-0- 
90,000
Contributions (funding) to the plan
  240,000
285,000
Benefits paid
  200,000
280,000
Actual return on plan assets
  252,000
260,000
Expected rate of return on assets
      6%
8%
Instructions
(a)  
Prepare a pension worksheet for the pension plan for 2014 and 2015.
(b)  
For 2015, prepare the journal entry to record pension-related amounts
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      p20-1_2-year_worksheet.doc