Klondike Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years

2014 and 2015.

2014 2015

Projected benefit obligation, January 1 $600,000

Plan assets (fair value and market-related value), January 1 410,000

Pension asset/liability, January 1 190,000 Cr.

Prior service cost, January 1 160,000

Service cost 40,000 $ 59,000

Settlement rate 10% 10%

Expected rate of return 10% 10%

Actual return on plan assets 36,000 61,000

Amortization of prior service cost 70,000 50,000

Annual contributions 97,000 81,000

Benefits paid retirees 31,500 54,000

Increase in projected benefit obligation due to changes in actuarial assumptions 87,000 -0-

Accumulated benefit obligation at December 31 721,800 789,000

Average service life of all employees 20 years

Vested benefit obligation at December 31 464,000

Instructions

(a)For both years 2014 and 2015, compute the annual pension expense.

(b)Prepare the journal entries to reflect all pension plan transactions and events at December 31 of each year