Question
!PLEASE COMPLETE ALL AND IN SAME FORMAT GIVEN! On January 1, 2016, Parkway Company adopted a defined benefit pension plan. At that time, Parkway awarded
!PLEASE COMPLETE ALL AND IN SAME FORMAT GIVEN!
On January 1, 2016, 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 2016 and 2017:
2016 | 2017 | |
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 2016 and 2017, respectively. There are no other components of Parkways pension expense. At the end of 2017, 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 2016 and 2017. |
2. | Prepare all the journal entries related to Parkways pension plan for 2016 and 2017. |
3. | What is the total accrued/prepaid pension cost at the end of 2017? Is it an asset or a liability? |
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parkway Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Prepare the entries to record prior service cost on January 1, 2016, and the pension expense and amortization of prior service costs on December 31, 2016 and 2017. Additional Instructions
PAGE 2016PAGE 2017
GENERAL JOURNAL
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 | |||||
2 | |||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
7 |
Compute the amount of Parkways pension expense for 2016 and 2017.
2016 | 2017 | |
Pension expense |
What is the total accrued/prepaid pension cost at the end of 2017? $__________
Is it an asset or liability? __________
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started