Question
Quest Corp. sponsors a defined benefit pension plan for its employees since its inception. On December 31, 2018, the projected benefit obligation and the accumulated
Quest Corp. sponsors a defined benefit pension plan for its employees since its inception. On December 31, 2018, the projected benefit obligation and the accumulated benefit obligation were $485,000 and $402,500, respectively. The fair value of pension plan assets amounted to $410,000 at the end of 2018. A 8% settlement rate and 10% of expected asset return rate were used in the actuarial present value computations in the pension plan. On December 31, 2019, the actuary provided the following information:
Part a) has been answered, but struggling with part b).
3. (24 points) Quest Corp. sponsors a defined benefit pension plan for its employees since its inception. On December 31, 2018, the projected benefit obligation and the accumulated benefit obligation were $485,000 and $402,500, respectively. The fair value of pension plan assets amounted to $410,000 at the end of 2018. A 8% settlement rate and 10% of expected asset return rate were used in the actuarial present value computations in the pension plan. On December 31, 2019, the actuary provided the following information: Present value of future benefits earned for employee service rendered in the current year = $52,000 Actual return on plan assets = $38,000 Employer's contribution to the plan assets = $75,000 Benefits paid to the retired employees = $60,000 (a) Prepare a pension worksheet and make the journal entries to reflect all pension plan transactions for 2019. Make sure to disclose Year-End Net Pension Asset/Liability balance (7 points) (a) Prepare a pension worksheet and make the journal entries to reflect all pension plan transactions for 2019. Make sure to disclose Year-End Net Pension Asset/Liability balance (7 points) GENERAL JOURNAL ENTRIES OCI MEMO RECORD Pension Expense Pension Asset/ Liability Projected Benefit Obligation Plan Assets Cash PSC Gain/Loss Items FYB Service costs Interest costs Actual return PSC Unexpected Gain/Loss Contributions Benefits paid Liability, G/L Journal entry FYE III Journal Entry to recognize 2019 pension expense and state net pension asset/liability balance (5 points) On January 1, 2020, pension agreement has amended and created Prior Service Cost (PSC) of $115,000. On December 31, 2020, the actuary provided the following information: Present value of future benefits earned for employee service rendered in the current year = $58,000 Actual return on plan assets = $46,300 Amortization of PSC = $23,000 Employer's contribution to the plan assets = $75,000 Benefits paid to the retired employees = $80,000 Due to changes in actuarial assumptions, PBO balance as of 12/31/2018 should be adjusted to $700,000. (b) Prepare a pension worksheet and make the journal entries to reflect all pension plan transactions for 2020. Make sure to disclose Year-End Net Pension Asset/Liability balance (7 points) MEMO RECORD GENERAL JOURNAL ENTRIES OCI Pension Expense Pension Asset/ Liability Projected Benefit Obligation Plan Assets Cas PSC Gain Loss Items FYB Service costs Interest costs Actual return PSC Unexpected Gain/Loss Contributions Benefits paid Liability, G/L Journal entry FYE Journal Entry to recognize 2020 pension expense and state net pension asset/liability balance (5 points)Step by Step Solution
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