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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.

Step by step solution

01

Meaning of Assets

In accounting, the term asset indicates a business entity's resources to generate revenues and accomplish its targets. Assets are reported in the positional statement and bifurcated intocurrent and non-current assets.

02

Preparation of worksheet

Items	Annual pension expense	Cash	OCI-prior service cost	Pension asset liability	Projected benefit	Plan assets
Opening balance				13,800	560,000	546,200
Prior service cost			120,000		120,000
New balance, Jan. 1, 2017					680,000	546,200
Service cost	58,000				58,000
Interest cost	61,200				61,200
Actual return	49,158					49,158
Contribution		65,000				65,000
Benefits					40,000	40,000
Journal entry, December 31	70,042	65,000	103,000	121,920
Accumulated OCI, December 31, 2016
Balance on December 31, 2017			103,000	135,720	759,200	620,358

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