On January 1, 2019, Parkway Company adopted a defined benefit pension plan. At that time, Parkway awarded retroactive benefits to its employees, resulting in a prior service cost of $2,180,000 on that date (which it did not fund). Parkway decided to amortize this cost by the straight-line method over the 16-year average remaining service life of its active participating employees. Parkways actuary and funding agency have also provided the following additional information for 2019 and 2020:

	2019	2020
Service cost	$340,000	$348,000
Projected benefit obligation (1/1)	2,180,000*	2,738,000
Plan assets (1/1)	0	670,000
Discount rate	10%	10%
Expected long-term (and actual) rate of return on plan assets		9%

*Due to the prior service cost

Parkway contributed $670,000 and $700,000 to the pension fund at the end of 2019 and 2020, respectively. There are no other components of Parkways pension expense. At the end of 2020, the projected benefit obligation was $3,359,800 and the fair value of the pension plan assets was $1,430,300.

Required:

1.	Compute the amount of Parkways pension expense for 2019 and 2020.
2.	Prepare all the journal entries related to Parkways pension plan for 2019 and 2020.
3.	What is the total accrued/prepaid pension cost at the end of 2020? Is it an asset or a liability?

Chart of Accounts

Compute the amount of Parkways pension expense for 2019 and 2020.

	2019	2020
Pension expense

2. Prepare the entries to record prior service cost on January 1, 2019, and the pension expense and amortization of prior service costs on December 31, 2019 and 2020.

General Journal Instructions

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PAGE 2019PAGE 2020

GENERAL JOURNAL

Score: 76/155

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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3. What is the total accrued/prepaid pension cost at the end of 2020?