The following defined pension data of Kay-Mart, Inc. apply to the year 2021: Plan Assets balance (171/21) Service cost Contributions to the plan Actual return on Plan Assets Expected Return on Plan assets Prior Service Cost (OCI) balance (1/1/21) Projected Benefit Obligation balance (1/1/21) Accrued Pension Liability balance (1/1/21) Prior Service Cost Amortization Settlement Discount Rate Benefits paid to retirees $790,000 180,000 160,000 44,000 8% 75,000 800,000 10,000 14,000 10% 75,000 Instructions 1. Complete the attached pension worksheet for Kay-Mart and show the journal entry(s) required to recognize pension costs. (The worksheet should include year-end balances for 2021) 2. Explain how the balances determined in instruction 1 would be shown in the financial statements by completing the table below. Be specific and state for each account which financial statement the account would appear (if at all) and where in the financial statements e.g., current asset, stockholder's equity. Account Which Financial Statement What Section of the Financial Statement Pension Expense Cash Pension Liability Projected Benefit Obligation Plan Assets Memo Only Journal Entries Items Annual Pension Expens Cash OCI Pension Projected Gains/ Asset Benefit Losses (Liability Obligatio > OCI Prior Service Cost Plan Assets n Beg. Balances (1/1/21) Service Cost Interest Cost Actual Retum Unexpected Asset Loss (adjustment to expected return) PSC Amortization Contributions (Funding) Benefits Paid = T Journal Entry Accumulated OCI (Bog Bal) 75,000 (Dr.) -0- Ending Balances (12/31/21) Journal Entry-Pension Expense Journal Entry - Pension Expense - Date Account Titles and Explanation PR Debit Credit De 202 1 The following defined pension data of Kay-Mart, Inc. apply to the year 2021: Plan Assets balance (171/21) Service cost Contributions to the plan Actual return on Plan Assets Expected Return on Plan assets Prior Service Cost (OCI) balance (1/1/21) Projected Benefit Obligation balance (1/1/21) Accrued Pension Liability balance (1/1/21) Prior Service Cost Amortization Settlement Discount Rate Benefits paid to retirees $790,000 180,000 160,000 44,000 8% 75,000 800,000 10,000 14,000 10% 75,000 Instructions 1. Complete the attached pension worksheet for Kay-Mart and show the journal entry(s) required to recognize pension costs. (The worksheet should include year-end balances for 2021) 2. Explain how the balances determined in instruction 1 would be shown in the financial statements by completing the table below. Be specific and state for each account which financial statement the account would appear (if at all) and where in the financial statements e.g., current asset, stockholder's equity. Account Which Financial Statement What Section of the Financial Statement Pension Expense Cash Pension Liability Projected Benefit Obligation Plan Assets Memo Only Journal Entries Items Annual Pension Expens Cash OCI Pension Projected Gains/ Asset Benefit Losses (Liability Obligatio > OCI Prior Service Cost Plan Assets n Beg. Balances (1/1/21) Service Cost Interest Cost Actual Retum Unexpected Asset Loss (adjustment to expected return) PSC Amortization Contributions (Funding) Benefits Paid = T Journal Entry Accumulated OCI (Bog Bal) 75,000 (Dr.) -0- Ending Balances (12/31/21) Journal Entry-Pension Expense Journal Entry - Pension Expense - Date Account Titles and Explanation PR Debit Credit De 202 1
