The Ark Company adopted a defined benefit pension plan for its employees on January 1, 2007. All its employees are the same age, retire at the same time, and have the same life expectancy after retirement. The company decided to compute its pension expense on December 31 of each year; it also decided to fund an amount on that date equal to the year’s service cost. The following is a listing of other relevant facts:

Annual pension benefits earned by all employees for each year of service* .....$100,000

Years to retirement (at end of 2007) .......................20

Years of life expectancy after date of retirement ..................15

Discount rate ..................................9%

Expected long-term (and actual) rate of return on plan assets .............8%

*Paid at end of each year

For the years 2007 through 2009 the company experienced no net gain or loss and did not have an additional pension liability in regard to the pension plan.

Required

1. Prepare a schedule to compute the Ark Company’s pension expense for 2007 through 2009. Round to the nearest dollar.

2. Prepare the year-end journal entries to record the company’s pension expense for 2007 through 2009.