On January 1, 2008, Diana Peter Company has the following defined benefit pension plan balances.

Projected benefit obligation.................................$4,200,000

Fair value of plan assets............................................4,200,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2009, the company amends its pension agreement so that prior service costs of $500,000 are created. Other data related to the pension plan are as follows.

Instructions

(a) Prepare a pension worksheet for the pension plan for 2008 and 2009.

(b) For 2009, prepare the journal entry to record pension-related amounts.

Transcribed Image Text:

2008 2009 Service costs $150,000 $180,000 Prior service costs amortization -0- 90,000 140,000 Contributions (funding) to the plan Benefits paid 185,000 200,000 280,000 Actual return on plan assets Expected rate of return on assets 252,000 260,000 6% 8%