Problem - Presented below is information related to Stage Department Stores, Inc. pension plan for 2016.
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Service cost
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$55,000
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Funding contribution for 2016
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53,000
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Settlement rate used in actuarial computation
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8%
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Expected return on plan assets
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7%
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Actual return on plan assets
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8%
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Amortization of PSC (due to benefit increase)
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90,000
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Projected benefit obligation (at beginning of period)
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540,000
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Fair value of plan assets (at beginning of period)
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360,000
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Accumulated benefit obligation at December 31
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739,600
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Average remaining service life of all employees
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20 years
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Vested benefit obligation at December 31
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768,000
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At the beginning of 2016, the actuary determines that the retirement period for all retirees will increase by an average of 2 years, increasing the projected benefit obligation by $129,000.
Instructions
(a) Compute the amount of pension expense to be reported for 2016. (Show computations.)
(b) Prepare the journal entry to record pension expense and the employer's contribution for 2016.