Question

E20-7(Bsic pension worksheet) The following defined pension data of Rydell Corp. apply to the year 2014.

Projected benefit obligation, 1/1/14 (before amendment) 560,000

Plan assets, 1/1/14 546,200

Pension liability 13,800

On January 1, 2014, Rydell Corp., through plan amendment,

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

Settlement rate 9%

Service cost 58,000

Contributions (funding) 65,000

65,000

Actual (expected) return on plan assets 52,280

Benefits paid to retirees 40,000

Prior service cost amortization for 2014 17,000

Instruction:

For 2014, prepare a pension worksheet for Rydell Corp that shows the journal entry for pension expense and the year end balance in teh related pension accounts.

Pension Worksheet—2014

General Journal Entries

Memo Record

Items

Annual

Pension

Expense

Cash

OCI – Prior Service Cost

Pension

Asset/

Liability

Projected

Benefit

Obligation

Plan

Assets

Balance, December 31, 2013

(a) Prior service cost

Balance, January 1, 2014

(b) Service cost

(c) Interest cost

(d) Actual return

(e) Amortization of PSC

(f) Contributions

(g) Benefits

Journal entry for 2014

Accumulated OCI, December 31, 2013

Balance, December 31, 2014

Interest cost = $560,000 + $120,000 = $680,000 × Settlement rate of 9% = $61,200.

Projected benefit obligation, 1/1/14 (before amendment) 560,000
Plan assets, 1/1/14 546,200
Pension liability 13,800
On January 1, 2014, Rydell Corp., through plan amendment, grants prior service benefits having a present value of 120,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 65,000	65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2014 17,000 Instruction: For 2014, prepare a pension worksheet for Rydell Corp that shows the journal entry for pension expense and the year end balance in teh related pension accounts. Pension Worksheet—2014   General Journal Entries Memo Record Items Annual Pension Expense Cash OCI – Prior Service Cost Pension Asset/ Liability Projected Benefit Obligation Plan Assets Balance, December 31, 2013             (a) Prior service cost             Balance, January 1, 2014             (b) Service cost             (c) Interest cost             (d) Actual return             (e) Amortization of PSC             (f) Contributions             (g) Benefits             Journal entry for 2014             Accumulated OCI, December 31, 2013             Balance, December 31, 2014                           Interest cost = $560,000 + $120,000 = $680,000 × Settlement rate of 9% = $61,200.