Veldre Company provides the following information about its defined benefit pension plan for the year 2014.
| Service cost | $90,600 | ||
| Contribution to the plan | 113,800 | ||
| Prior service cost amortization | 12,300 | ||
| Actual and expected return on plan assets | 72,900 | ||
| Benefits paid | 43,600 | ||
| Plan assets at January 1, 2014 | 641,900 | ||
| Projected benefit obligation at January 1, 2014 | 706,400 | ||
| Accumulated OCI (PSC) at January 1, 2014 | 158,300 | ||
| Interest/discount (settlement) rate | 9 | % |
1. Prepare a pension worksheet inserting January 1, 2014, balances, showing December 31, 2014.
2. Prepare the journal entry recording pension expense.
1. Prepare a pension worksheet inserting January 1, 2014, balances, showing December 31, 2014.
Answer:
| Computation of pension Expanses | |
| Particular | Amount in $ |
| Service cost | 90600 |
| Interest cost ($706,400 x 9%) | 63576 |
| Expected return on plan assets | -72900 |
| Prior service cost amortization | 12300 |
| Pension expense for 2014 | 93576 |
2. Prepare the journal entry recording pension expense.
| Pension Expnses A/C | 93576 | |
| AOCI | 12300 | |
| Pension Related A/L | 81276 |
