Accounting for Pensions (22 points) 3 Bottle Rocket Company sponsors a non-contributory defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2017 and 2018 2017 $700,000 650,000 50,000 80,000 75,000 70,000 2018 Projected Benefit Obligation, 1/1 Fair Value of Plan Assets, 1/1 Balance in Net Pension Liability/Asset, 1/1 (Unrecognized) AOCI - Prior Service Cost (S/E), 1/1 (Unrecognized) AOCI - Net Actuarial Gain (S/E), 1/1 Service Cost $75,000 Discount (Settlement) Rate Expected Rate of Retun on Plan Assets Actual Retum on Plan Assets 4% 4% 6% 35,000 80,000 5% 40,000 75,000 Annual Contributions to the Pension Plan at 12/31 Increase in PBO due to change in actuarial assumptions about future salaries (at year-end, 12/31) Payments from the Pension Plan to retirees at 12/31 Average remaining service life of employees 20,000 75,000 10 years 0 70,000 9 years Required (hint -it is probably helpful to use worksheets): a. Detemine Pension Expense for 2017 and 2018. (11 pts) b. Prepare the jourmal entry necessary to reflect pension transactions in 2017 and 2018. (6 pts) c. What are the balances in Accumulated OCI - PSC and Accumulated OCI-Actuarial Gain/Loss at 12/31/17 and 12/31/18, respectively? (3 pts) d. What is the funded status of the plan on 12/31/17 and 12/31/18, respectively? (2 pts) Accounting for Pensions (22 points) 3 Bottle Rocket Company sponsors a non-contributory defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2017 and 2018 2017 $700,000 650,000 50,000 80,000 75,000 70,000 2018 Projected Benefit Obligation, 1/1 Fair Value of Plan Assets, 1/1 Balance in Net Pension Liability/Asset, 1/1 (Unrecognized) AOCI - Prior Service Cost (S/E), 1/1 (Unrecognized) AOCI - Net Actuarial Gain (S/E), 1/1 Service Cost $75,000 Discount (Settlement) Rate Expected Rate of Retun on Plan Assets Actual Retum on Plan Assets 4% 4% 6% 35,000 80,000 5% 40,000 75,000 Annual Contributions to the Pension Plan at 12/31 Increase in PBO due to change in actuarial assumptions about future salaries (at year-end, 12/31) Payments from the Pension Plan to retirees at 12/31 Average remaining service life of employees 20,000 75,000 10 years 0 70,000 9 years Required (hint -it is probably helpful to use worksheets): a. Detemine Pension Expense for 2017 and 2018. (11 pts) b. Prepare the jourmal entry necessary to reflect pension transactions in 2017 and 2018. (6 pts) c. What are the balances in Accumulated OCI - PSC and Accumulated OCI-Actuarial Gain/Loss at 12/31/17 and 12/31/18, respectively? (3 pts) d. What is the funded status of the plan on 12/31/17 and 12/31/18, respectively? (2 pts)
