Exercise 20-12

Novak Company received the following selected information from its pension plan trustee concerning the operation of the company's defined benefit pension plan for the year ended December 31, 2017.

January 1, 2017

December 31, 2017

Projected benefit obligation$1,491,000$1,517,000Market-related and fair value of plan assets804,0001,138,400Accumulated benefit obligation1,587,0001,704,700Accumulated OCI (G/L)Net gain0(199,100)

The service cost component of pension expense for employee services rendered in the current year amounted to $76,000and the amortization of prior service cost was $117,700. The company's actual funding (contributions) of the plan in 2017 amounted to $254,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,177,000on January 1, 2017. Assume no benefits paid in 2017.

Determine the amounts of the components of pension expense that should be recognized by the company in 2017.(Enter amounts that reduce pension expense with either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

Components of Pension Expense

Actual Return on Plan Assets

Amortization of Prior Service Cost

Benefits Paid

Contributions to Plan

Expected Return on Plan Assets

Interest on Projected Benefit Obligation

Service Cost

$

Actual Return on Plan Assets

Amortization of Prior Service Cost

Benefits Paid

Contributions to Plan

Expected Return on Plan Assets

Interest on Projected Benefit Obligation

Service Cost

Actual Return on Plan Assets

Amortization of Prior Service Cost

Benefits Paid

Contributions to Plan

Expected Return on Plan Assets

Interest on Projected Benefit Obligation

Service Cost

Actual Return on Plan Assets

Amortization of Prior Service Cost

Benefits Paid

Contributions to Plan

Expected Return on Plan Assets

Interest on Projected Benefit Obligation

Service Cost

SHOW LIST OF ACCOUNTS

record pension expense and the employer's contribution to the pension plan in 2017.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

(To record pension expense and employer's contribution)

SHOW LIST OF ACCOUNTS

pension-related amounts that would be reported on the income statement and the balance sheet for Novak Company for the year 2017.

NovakCompany

Income Statement (Partial)

December 31, 2017

For the Year Ended December 31, 2017

For the Quarter Ended December 31, 2017

Dividends

Expenses

Net Income / (Loss)

Retained Earnings - January 1, 2017

Retained Earnings - December 31, 2017

Revenues

Total Expenses

Total Revenues

Amortization of PSC

Interest Expense

Pension Expense

Rent Expense

Service Cost

$

NovakCompany

Comprehensive Income Statement

December 31, 2017

For the Year Ended December 31, 2017

For the Quarter Ended December 31, 2017

Dividends

Expenses

Net Income / (Loss)

Retained Earnings - January 1, 2017

Retained Earnings - December 31, 2017

Revenues

Total Expenses

Total Revenues

$XXXX

Amortization of PSC

Comprehensive Income

Interest Expense

Liability Gain

Pension Expense

Rent Expense

Service Cost

Other Comprehensive Income (Loss)

Amortization of PSC

Comprehensive Income

Interest Expense

Liability Gain

Pension Expense

Rent Expense

Service Cost

Other Comprehensive Income (Loss)

$

Amortization of PSC

Comprehensive Income

Interest Expense

Liability Gain

Pension Expense

Rent Expense

Service Cost

Other Comprehensive Income (Loss)

Amortization of PSC

Comprehensive Income

Interest Expense

Liability Gain

Pension Expense

Rent Expense

Service Cost

Other Comprehensive Income (Loss)

$XXXX

NovakCompany

Balance Sheet (Partial)

December 31, 2017

For the Year Ended December 31, 2017

For the Quarter Ended December 31, 2017

Current Assets

Liabilities

Intangible Assets

Property, Plant and Equipment

Stockholders' Equity

Total Assets

Total Current Assets

Total Current Liabilities

Total Intangible Assets

Total Liabilities

Total Liabilities and Stockholders' Equity

Total Property, Plant and Equipment

Total Stockholders' Equity

Accounts Payable

Accounts Receivable

Accumulated Depreciation

Accumulated Other Comprehensive Income (G/L)

Accumulated Other Comprehensive Loss (G/L)

Accumulated Other Comprehensive Income (PSC)

Accumulated Other Comprehensive Loss (PSC)

Common Stock

Pension Liability

Retained Earnings

$

Current Assets

Current Liabilities

Intangible Assets

Long-term Investments

Long-term Liabilities

Property, Plant and Equipment

Stockholders' Equity

Total Assets

Total Current Assets

Total Current Liabilities

Total Intangible Assets

Total Liabilities

Total Liabilities and Stockholders' Equity

Total Long-term Investments

Total Long-term Liabilities

Total Property, Plant and Equipment

Total Stockholders' Equity

Accounts Payable

Accounts Receivable

Accumulated Depreciation

Accumulated Other Comprehensive Income (G/L)

Accumulated Other Comprehensive Loss (G/L)

Accumulated Other Comprehensive Income (PSC)

Accumulated Other Comprehensive Loss (PSC)

Common Stock

Pension Liability

Retained Earnings

$

Accounts Payable

Accounts Receivable

Accumulated Depreciation

Accumulated Other Comprehensive Income (G/L)

Accumulated Other Comprehensive Loss (G/L)

Accumulated Other Comprehensive Income (PSC)

Accumulated Other Comprehensive Loss (PSC)

Common Stock

Pension Liability

Retained Earnings