Cruise Company has a noncontributory defined benefit pension plan. The annual accounting period ends on December 31. The following plan information relates to the year 2020.

Required

a. Create a worksheet to summarize the pension data at the end of 2020. Assume that Cruise uses the corridor approach in amortizing any pension gain/loss.

b. The company president asked the following question: We paid \(\$ 3,000\) cash to the pension fund, but the projected benefit obligation increased over \(\$ 2,000\). Why? Prepare a written response with data and explanation.

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Projected Benefit Obligation Balance, Jan. 1, 2020.. Service cost Interest cost ($16,000 x 8% discount rate) Loss (gain) change in actuarial assumptions determined Dec. 31, 2020.. Pension benefit paid to retirees Balance, Dec. 31, 2020 Plan Assets $16,000 Balance, Jan. 1, 2020.... $12,600 1,920 Actual return on plan assets. 1,000 1,280 Funding to plan by Cruise. 3,000 Pension benefits paid to retirees (1,600) 660 Balance, Dec. 31, 2020 $15,000 (1,600) $18,260 Other Information Accumulated OCI-Prior Service Cost, Jan. 1, 2020.... Accumulated OCI-Pension Gain/Loss, Jan. 1, 2020 Expected return on plan assets Average remaining service period $1,980 Dr. 440 Cr. 1,000 11 years