Bailey Company has had a defined benefit pension plan for several years. At the end of 2019,

Question:

Bailey Company has had a defined benefit pension plan for several years. At the end of 2019, Bailey’s actuary provided the following information for 2019 regarding the pension plan: (1) service cost, $115,000; (2) expected return on plan assets, $14,000; (3) amortization of net loss, $2,000; (4) interest cost on projected benefit obligation, $16,000; and (5) amortization of prior service cost, $4,000. Bailey decides to fund an amount at the end of 2019 equal to its pension expense.

Required:
1. Compute the amount of Bailey’s pension expense for 2019 and prepare the related journal entry.
2. Next Level If Bailey had decided to fund an amount less than the 2019 pension expense, how would the company’s balance sheet be affected?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...

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