Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Larkspur 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

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Larkspur 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, 2020. January 1, 2020 December 31, 2020 Projected benefit obligation $1,508,000 $1,537,000 Market-related and fair value of plan assets 807,000 1.138.700 Accumulated benefit obligation 1,581,000 1.702,800 Accumulated OCI (G/L)-Net gain 0 (200,800) The service cost component of pension expense for employee services rendered in the current year amounted to $79,000 and the amortization of prior service cost was $121,800. The company's actual funding (contributions) of the plan in 2020 amounted to $251,000. 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 $1,218,000 on January 1, 2020. Assume no benefits paid in 2020. (a) Your answer is correct. Determine the amounts of the components of pension expense that should be recognized by the company in 2020. (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 Service Cost $ 79000 Interest on Projected Benefit Obligation 150800 Expected Return on Plan Assets -80700 Amortization of Prior Service Cost 121800 270900 (b) Your answer is correct. Prepare the journal entry to record pension expense and the employer's contribution to the pension plan in 2020. (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 O for the amounts.) Account Titles and Explanation Debit Credit Pension Expense 270900 Pension Asset/Liability 302700 Other Comprehensive Income (PSC) 121800 Other Comprehensive Income (G/L) 200800 Cash 251000 (To record pension expense and employer's contribution) (c) Indicate the pension-related amounts that would be reported on the income statement and the balance sheet for Larkspur Company for the year 2020. Larkspur Company Income Statement (Partial) For the Year Ended December 31, 2020 $ $ Larkspur Company Comprehensive Income Statement For the Year Ended December 31, 2020 V Net Income /(Loss) $XXXX Other Comprehensive Income (Loss) Amortization of PSC $ Liability Gain Comprehensive Income $XXXX Larkspur Company Balance Sheet (Partial) December 31, 2020 Liabilities Pension Liability $ Stockholders' Equity Accumulated Other Comprehensive Income (PSC) V $ Accumulated Other Comprehensive Income (G/L)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Connect For Computer Accounting With Quickbooks 2021

Authors: Author

20th Edition

1264069200, 9781264069200

More Books

Students also viewed these Accounting questions