On January 1, 2010, Cunningham Company has the following defined-benefit pension plan balances.
Projected benefit 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 prior service costs of $500,000 are created. Other data related to pension plan are as follows.
Service Cost $150,000 $180,000
Prior Service cost amortization $0 $90,000
Contribution (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 worksheet for pension plan for 2010 and 2011.
B) For 2011, prepare the journal entry to record pension-related amounts.