Question
Howard Corp. sponsors a defined-benefit pension plan for its employees.On January 1, 2011, the following balances related to this plan. Plan assets (market-related value) $500,000
Howard Corp. sponsors a defined-benefit pension plan for its employees.On January 1, 2011, the following balances related to this plan.
Plan assets (market-related value) $500,000
Projected benefit obligation 600,000
OCI - Prior service cost 75,000
OCI - Loss 70,000
As a result of the operation of the plan during 2011, the actuary provided the following additional data at December 31, 2011.
Service cost for 2011$ 75,000
Actual return on plan assets in 2011 45,000
Amortization of prior service cost 20,000
Contributions in 2011 115,000
Benefits paid retirees in 201170,000
Interest rate7%
Expected return rate10%
Average remaining service life of active employees 10 years
Instructions
(a)Using the above information to complete the pension work sheet for 2011 (see the next page). Indicate (credit) entries by parentheses.
(b)Prepare the journal entry to reflect the accounting for the company's pension plan for the year ending December 31, 2011.
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