Question
Wildhorse Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2020. The insurance company which administers the pension plan
Wildhorse Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2020. The insurance company which administers the pension plan provided the following selected information for the years 2020, 2021, and 2022. For Year Ended December 31, 2020 2021 2022 Plan assets (fair value) $ 50,000 $ 84,800 $ 178,880 Accumulated benefit obligation 45,300 166,700 290,600 Projected benefit obligation 60,000 198,900 323,200 Net (gain) loss (for purposes of corridor calculation) 0 77,700 80,070 Employers funding contribution (made at end of year) 50,000 60,000 104,200 There were no balances as of January 1, 2020, when the plan was initiated. The actual and expected return on plan assets was 10% over the 3-year period, but the settlement rate used to discount the companys pension obligation was 13% in 2020, 11% in 2021, and 8% in 2022. The service cost component of net periodic pension expense amounted to the following: 2020, $ 60,000; 2021, $ 84,800; and 2022, $ 119,800. The average remaining service life per employee is 12 years. No benefits were paid in 2020, $ 30,200 of benefits were paid in 2021, and $ 18,600 of benefits were paid in 2022 (all benefits paid at end of year). (a) Calculate the amount of net periodic pension expense that the company would recognize in 2020, 2021, and 2022. (Round answers to 0 decimal places, e.g. 2,525.)
Prepare the journal entries to record net periodic pension expense, employers funding contribution, and related pension amounts for the years 2020, 2021, and 2022. (Round answers to 0 decimal places, e.g. 2,525. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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