Determine the projected benefit obligation


Pension plan calculations and journal entry.

On January 1, 2004, Stine Co. had the following balances:

         Projected benefit obligation                                                 $3,700,000

         Fair value of plan assets                                                       3,700,000

 

Other data related to the pension plan for 2004:

         Service costs                                                                         140,000

         Unrecognized prior service cost                                                   -0-

         Contributions to the plan                                                         224,000

         Benefits paid                                                                          200,000

         Actual return on plan assets                                                     222,000

         Settlement rate                                                                           9%

         Expected rate of return                                                                6%


Instructions

(a) Determine the projected benefit obligation at December 31, 2004. There are no net gains or losses.

(b) Determine the fair value of plan assets at December 31, 2004.

(c) Calculate pension expense for 2004.

(d) Prepare the journal entry to record pension expense and the contributions for 2004.

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Accounting Basics: Determine the projected benefit obligation
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