Problem - Silver Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2007 and 2008.
|
2007
|
2008
|
|
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 entries to record the pension expense and the company's funding of the pension plan for both years.