P20-8 (Comprehensive 2-Year Worksheet) Lemke Company sponsors a defined benefit pension plan for

its employees. The following data relate to the operation of the plan for the years 2012 and 2013.

2012 2013

Projected benefi t 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

Benefi ts paid retirees 31,500 54,000

Increase in projected benefi t obligation due to

changes in actuarial assumptions 87,000 0

Accumulated benefi t obligation at December 31 721,800 789,000

Average service life of all employees 20 years

Vested benefi t obligation at December 31 464,000

Instructions

(a) Prepare a pension worksheet presenting both years 2012 and 2013 and accompanying computations

and amortization of the loss (2013) using the corridor approach.

(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events

at December 31 of each year.

(c) For 2013, indicate the pension amounts reported in the financial statements.