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Chapter 20: E20-20 (page 1168)

Using the information in E20-19, prepare a worksheet inserting January 1, 2017, balances, and showing December 31, 2017, balances. Prepare the journal entry recording postretirement benefit expense.

Short Answer

Expert verified

A pension worksheet is atabular representation of the total components of the pension plan. This worksheet shows theeffect of each component on the pension amount.

Step by step solution

01

Pension worksheet for the year January 1, 2017.

Kreter Co.
Pension Worksheet at January 1, 2017
General journal entries
Memo record

Particulars

Annual postretirement expense

Cash

Pension asset/liability

Annual projected benefit obligation

Plan assets

Balance Jan 1, 2017

$220,000 Cr.

$330,000 Cr.

$110,000 Dr.

Service cost

$45,000 Dr.

$45,000 Cr.

Interest cost

$26,400 Dr.

$26,400 Cr.

Actual return

$11,000 Cr.

$11,000 Dr.

Contributions

$10,000 Cr.

$10,000 Dr.

Benefits

$20,000 Dr.

$20,000 Cr.

Journal Entry for 2017

$60,400 Dr.

$10,000 Cr.

$50,400 Cr.

Balance Dec 31, 2017

$270,400 Cr.

$381,400 Cr.

$111,000 Dr.

02

Journal entry to record the postretirement benefit expense for 2017.

Kreter Co.
Journal Entry

Date

Particulars

Debit

Credit

2017

Postretirement expense

$60,400

Postretirement asset/liability

$50,400

Cash

$10,000

(To record the postretirement expense)


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Most popular questions from this chapter

Describe the reporting of pension plans for a company with multiple plans, some of which are underfunded and some of which are overfunded.

Hanson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances related to this plan. Plan assets (market-related value) \(520,000 Projected benefi t obligation 700,000 Pension asset/liability 180,000 Cr. Prior service cost 81,000 Net gain or loss (debit) 91,000 As a result of the operation of the plan during 2017, the actuary provided the following additional data for 2017. Service cost \)108,000 Settlement rate, 9%; expected return rate, 10% Actual return on plan assets 48,000 Amortization of prior service cost 25,000 Contributions 133,000 Benefits paid retirees 85,000 Average remaining service life of active employees 10 years

Instructions Using the preceding data, compute pension expense for Hanson Corp. for the year 2017 by preparing a pension worksheet that shows the journal entry for pension expense. Use the market-related asset value to compute the expected return and for corridor amortization.

The following information is available for the pension plan of Radcliffe Company for the year 2017. 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, 2017 500,000 Service cost 60,000 Instructions (a) Compute pension expense for the year 2017. (b) Prepare the journal entry to record pension expense and the employer鈥檚 contribution to the pension plan in 2017.

At the end of the current period, Oxford Ltd. has a defined benefit obligation of \(195,000 and pension plan assets with a fair value of \)110,000. The amount of the vested benefits for the plan is \(105,000. What amount related to its pension plan will be reported on the company鈥檚 statement of financial position? (a) \)5,000. (c) \(85,000. (b) \)90,000. (d) $20,000.

Englehart Co. provides the following information about its postretirement benefit plan for the year 2017. Service cost $ 90,000 Prior service cost amortization 3,000 Contribution to the plan 56,000 Actual and expected return on plan assets 62,000 Benefits paid 40,000 Plan assets at January 1, 2017 710,000 Accumulated postretirement benefit obligation at January 1, 2017 760,000 Accumulated OCI (PSC) at January 1, 2017 100,000 Dr. Discount rate 9% Instructions Compute the postretirement benefit expense for 2017.
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