Question
The following facts apply to the pension plan of Boudreau Inc. for the year 2014. Plan assets, January 1, 2014 $490,000 Projected benefit obligation, January
The following facts apply to the pension plan of Boudreau Inc. for the year 2014.
| Plan assets, January 1, 2014 | $490,000 | |
| Projected benefit obligation, January 1, 2014 | 490,000 | |
| Settlement rate | 8 | % |
| Service cost | 40,000 | |
| Contributions (funding) | 25,000 | |
| Actual and expected return on plan assets | 49,700 | |
| Benefits paid to retirees | 33,400 |
Using the preceding data, compute pension expense for the year 2014. As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for 2014 and the year-end balances in the related pension accounts.
| BOUDREAU INC. Pension Worksheet2014 | ||||||||||
| General Journal Entries | Memo Record | |||||||||
| Items | Annual Pension Expense | Cash | Pension Asset/ Liability | Projected Benefit Obligation | Plan Assets | |||||
| Balance, January 1, 2014 | $ | Dr.Cr. | $ | Dr.Cr. | $ | Dr.Cr. | $ | Dr.Cr. | $ | Dr.Cr. |
| Service cost | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | |||||
| Interest cost | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | |||||
| Actual return | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | |||||
| Contributions | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | |||||
| Benefits | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | |||||
| Journal entry, December 31 | $ | Dr.Cr. | $ | Dr.Cr. | Dr.Cr. | Dr.Cr. | Dr.Cr. | |||
| Balance, December 31, 2014 | $ | Dr.Cr. | $ | Dr.Cr. | $ | Dr.Cr. |
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Intermediate Accounting Reporting and Analysis
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
3rd edition
9781337909402, 978-1337788281
