Pension Expense Different Than Funding: One Year
Response to the following problem:
The Verna Company has had a defined benefit pension plan for several years. At the end of 2010, the company accumulated the following information: (1) service cost for 2010, $127,000; (2) projected benefit obligation, 1/1/2010, $634,000; (3) discount rate, 9%; (4) plan assets, 1/1/2010, $589,000; and (5) expected long-term rate of return on plan assets, 9%. There are no other components of Verna Company's pension expense. The company had an accrued/prepaid pension cost liability at the end of 2009. The company contributed $128,000 to the pension plan at the end of 2010.
Required
Compute the amount of Verna Company's pension expense for 2010 and prepare the related journal entry.