Excel Problem: Upload your solution to the dropbox on eLearning (Due date: March 21, 2023) HRC Company sponsors a defined benefits pension plan to its employees. On January 1, 2021, the balances related to pension plan were as follows: Projected benefit obligation (PBO) $2,600,000 Fair value of plan assets $2,500,000 AOCI - Prior service cost -0- AOCI - Net Loss -0- The discount (or settlement) rate applicable to the plan is 10%. On January 1, 2022, the company amends the pension agreement resulting in a prior service cost of $260,000. The company uses straight- line amortization of prior service costs over the average remaining service life of the employees. Other data related to the pension plan are as follows: 2021 2022 Service cost $150,000 $170,000 Contributions (funding) to the plan 500,000 880,000 Benefits paid to retirees 220,000 280,000 Actual return on plan assets 150,000 200,000 Increase in PBO due to changes in actuarial 250,000 -0- assumptions Expected return on plan assets 10% Average service life of all employees 10% 10 years Required: Using the Excel template provided (or you can use your own template as well): 1. Prepare Pension worksheet for the year 2021 and 2022 in Excel. Make sure to include all accompanying computations at the bottom of the worksheet (such as amortization of gain/losses). 2. Prepare the necessary journal entries for each year associated with the defined benefits pension plan for HRC. 3. What different amount(s)/ balances will be reported in the income statement and balance sheet at the end of year 2021 and 2022? 4. Is the pension plan underfunded or overfunded at the end of 2022 based on your computations? 5. Based on your answer for requirement 4, does HRC needs to increase or decrease the contributions to the pension plan in future assuming no immediate changes in actuarial assumptions? Why? 6. What journal entry would be recorded by HRC at the end of 2021 and 2022, if it was a defined contributions plan instead of defined benefits pension plan? Which of the two pension plans is a better choice for the HRC company and Why? Year 2021 Worksheet Journal Entry Memo Entry Only AOCI - Net Pension Pension PBO (Pension Expense Cash AOCI - PSC (Gain)/Loss Asset/Liability Liability) Plan Assets Beginning Balance New PSC (at beg. Of year) Adjusted Beginning Balance A. Pension Expense: 1. Service cost 2. Interest cost 3. Expected Return 4. Amortized PSC 5. Amortized (Gain/Loss) B. New Gain/Loss 1. G/L on PBO 2. G/L on Plan Assets C. Contributions D. Benefits Paid Total changes during the period Total/End. Balance Journal Entries (2021)