Pension Expense, Journal Entries
Response to the following problem:
Latoya Company provides the following selected information related to its defined benefit pension plan for 2014.
Pension asset/liability (January 1) $ 25,000 Cr,
Accumulated benefit obligation (December 31) 400,000
Actual and expected return on plan assets 10,000
Contributions (funding) in 2014 150,000
Fair value of plan assets (December 31) 800,000
Settlement rate 10%
Projected benefit obligation (January 1) 700,000
Service cost 80,000
Instructions
(a) Compute pension expense and prepare the journal entry to record pension expense and the employer's contribution to the pension plan in 2014. Preparation of a pension worksheet is not required. Benefits paid in 2014 were $35,000.
(b) Indicate the pension-related amounts that would be reported in the company's income statement and balance sheet for 2014.