Prepare the journal entries from the worksheet to reflect

Question

E 20-19 (Postretirement Benefit Expense Computation)

 

Kreter Co. provides the following information about its postretirement benefit plan for the year 2014.

 

Service cost	$45,000
Contribution to the plan	10,000
Actual and expected return on plan assets	11,000
Benefits paid	20,000
Plan assets at January 1, 2014	110,000
Accumulated postretirement benefi t obligation at January 1, 2014	330,000
Discount rate	8%

 

Instructions

 

Compute the postretirement benefit expense for 2014.

 

P20-8 (Comprehensive 2-Year Worksheet) Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2014 and 2015.

 

	2014	2015
Projected benefit obligation, January 1	$600,000
Plan assets (fair value and market-related value), January 1	410,000
Pension asset/liability, January 1	190,000 Cr.
Prior service cost, January 1	160,000
Service cost	40,000	$59,000
Settlement rate	10%	10%
Expected rate of return	10%	10%
Actual return on plan assets	36,000	61,000
Amortization of prior service cost	70,000	50,000
Annual contributions	97,000	81,000
Benefits paid retirees	31,500 54,000
Increase in projected benefit obligation due to
changes in actuarial assumptions	87,000	-0-
Accumulated benefit obligation at December 31	721,800	789,000
Average service life of all employees		20 years
Vested benefit obligation at December 31		464,000

 

Instructions

 

(a) Prepare a pension worksheet presenting both years 2014 and 2015 and accompanying computations and amortization of the loss (2015) using the corridor approach.

 

(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.

 

(c) For 2015, indicate the pension amounts reported in the financial statements.