Discuss the below:
Q1: The following information is available for the pension plan of Brady Company for the year 2010.
| Actual and expected rate of return on plan assets |
$15,000 |
| Benefits paid to retirees |
40,000 |
| Contributions (funding) |
90,000 |
| Interest/discount rate |
10% |
| Prior service cost amortization |
8,000 |
| Projected benefit obligation, January 1, 2010 |
500,000 |
| Service cost |
60,000 |
(a) Compute pension expense for the year 2010.
(b) Prepare the journal entry to record pension expense and the employer's contribution to the pensionplan in 2010
Q2: The following defined pension data of Rydell Corp. apply to the year 2010.
| Projected benefit obligation, 1/1/10 (before amendment) |
$560,000 |
| Plan assets, 1/1/10 |
546,200 |
| Pension liability |
13,800 |
On January 1, 2010, Rydell Corp., through plan amendment,
grants prior service benefits having a present value of |
120,000 |
| Settlement rate |
9% |
| Service cost |
58,000 |
| Contributions (funding) |
65,000 |
| Actual (expected) return on plan assets |
52,280 |
| Benefits paid to retirees |
40,000 |
| Prior service cost amortization for 2010 |
17,000 |
Instructions:
For 2010, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Q3: On January 1, 2010, Cunningham Company has the following definedbenefit pension plan balances.
| Projected benefits obligation |
$4,500,000 |
| Fair value of plan assets |
4,200,000 |
The interest (settlement) rate applicable to the plan is 10% On January 1, 2011, the company amends its pension agreement so that service costs of $500,000 are created. Other data related to the pension plan are as follows:
|
2010 |
2011 |
|
Service costs |
$150,000 |
$180,000 |
|
Prior service costs amortization |
0 |
90,000 |
|
Contributions (funding) to the plan |
240,000 |
285,000 |
|
Benefits paid |
200,000 |
280,000 |
|
Actual return on plan assets |
252,000 |
260,000 |
|
Expected rate of return on assets |
6% |
8% |
Instructions:
(a) Prepare a pension work sheet for the pension plan for 2010 and 2011.
(b) For 2011, prepare the journal entry to record pension-related amounts.
Q4: Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2010 and 2011.
|
2010 |
2011 |
|
Plan assets (fair value), December 31 |
$699,000 |
$849,000 |
|
Projected benefit obligation, January 1 |
700,000 |
800,000 |
|
Pension asset/liability, January 1 |
(140,000) |
? |
|
Prior service cost, January 1 |
250,000 |
240,000 |
|
Service cost |
60,000 |
90,000 |
|
Actual and expected return on plan assets |
24,000 |
30,000 |
|
Amortization of prior service cost |
10,000 |
12,000 |
|
Contributions (funding) |
115,000 |
120,000 |
|
Accumulated benefit obligation, December 31 |
500,000 |
550,000 |
|
Interest/settlement rate |
9% |
9% |
Instructions:
(a) Compute pension expense for 2010 and 2011.
(b) Prepare the journal entr ies to record the pension expense and the company's funding of the pension plan for both years.
Attachment:- Pension expenses.rar