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Nunez Corp. sponsors a defined benefit pension plan for its employees. Information about the plan is provided below. Required: (a) Determine the pension-related journal
Nunez Corp. sponsors a defined benefit pension plan for its employees. Information about the plan is provided below. Required: (a) Determine the pension-related journal entries that Nunez should record for 2021 and 2022. (b) Determine the effects of the pension plan on Nunez's reported net income for 2021 and 2022 (ignoring taxes). (c) Determine the balances that Nunez should report on its December 31, 2021 and 2022 balance sheets for Net Pension Asset or Liability, Accumulated OCI-Prior Service Costs, and Accumulated OCI-Actuarial Gain/Loss. Also indicate the sections of the balance sheet in which each of these items should appear (i.e., Assets, Liabilities, or Equity). (d) Prepare pension worksheets to summarize the pension data for 2021 and 2022. This should help you determine the answers to parts (a), (b), and (c) above. You may use the templates provided later in this document. Balances at December 31, 2020 ($ in thousands) Projected Benefit Obligation Plan Assets Accumulated OCI-Prior Service Costs Accumulated OCI-Actuarial Gain/Loss $1,600 1,250 0 210 gain Activity during the year ($ in thousands) 2021 2022 Service cost $190 $205 Prior service cost (plan amended, Jan. 1, 2022) 0 310 Actual return on plan assets 85 120 Contributions from Nunez to pension plan 200 270 Benefits paid from pension plan to retirees 160 165 Other information 2021 2022 Expected return on plan assets 8% 8% Discount rate ("settlement rate") 5% 5% Average expected future service life of active employees 5 years 5 years
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