The Carpenter Company adopted a defined benefit pension plan for its employees on January 1, 2007. At the time of adoption the pension contract provided for retroactive benefits for the company’s active participating employees. These retroactive benefits resulted in an unrecognized prior service cost of $1,860,000 that created a projected benefit obligation of the same amount on that date. The company decided to amortize the unrecognized prior service cost by the straight-line method over the 20-year average remaining service life of the employees. The following additional information is also available for 2007 and 2008:

(1) Discount rate for both 2007 and 2008: 8%;

(2) Company contribution (funded 12/31): 2007, $550,000; 2008, $510,000;

(3) Expected long-term rate of return on plan assets: 9%;

(4) Actual rate of return on plan assets, 10%;

(5) Service cost: 2007, $257,000; 2008, $264,000; and

(6) Plan assets: 1/1/2007, $0. The company paid pension benefits of $30,000 each year. There are no other components of Carpenter Company’s pension expense; ignore any additional pension liability.

Required

Prepare a pension plan worksheet that includes the calculation of the Carpenter Company’s pension expense for 2007 and 2008, the reconciliation of the beginning and ending projected benefit obligation for 2007 and 2008, the reconciliation of the beginning and ending plan assets for 2007 and 2008, and the journal entry to record the pension expense at the end of 2007 and 2008, indicating whether each component is a debit or credit.