Prepare a pension worksheet that shows the journal entry for pension expense for 2014 and the year-end balances in the related pension accounts. Determine the amounts of the components of pension expense that should be recognized by the company in 2014.

E20-2 (Computation of Pension Expense) Veldre Company provides the following information about its defined benefit pension plan for the year 2014.
Service cost $ 90,000
Contribution to the plan 105,000
Prior service cost amortization 10,000
Actual and expected return on plan assets 64,000
Benefi ts paid 40,000
Plan assets at January 1, 2014 640,000
Projected benefi t obligation at January 1, 2014 700,000
Accumulated OCI (PSC) at January 1, 2014 150,000
Interest/discount (settlement) rate 10%
Instructions
Compute the pension expense for the year 2014

Instructions

Compute the pension expense for the year 2014.

 

E20-3 (Preparation of Pension Worksheet) Using the information in E20-2, prepare a pension worksheet

inserting January 1, 2014, balances, showing December 31, 2014, balances, and the journal entry recording

pension expense.

E20-4 (Basic Pension Worksheet) The following facts apply to the pension plan of Boudreau Inc. for theyear 2014.

Plan assets, January 1, 2014 $490,000

Projected benefi t obligation, January 1, 2014 490,000

Settlement rate 8%

Service cost 40,000

Contributions (funding) 25,000

Actual and expected return on plan assets 49,700

Benefi ts paid to retirees 33,400

Instructions

Using the preceding data, compute pension expense for the year 2014. As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for 2014 and the year-end balances in the related pension accounts.

E20-5 (Application of Years-of-Service Method) Andrews Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of

2014 are as follows.

Future

Employee Years of Service

Jim 3

Paul 4

Nancy 5

Dave 6

Kathy 6

On January 1, 2014, the company amended its pension plan, increasing its projected benefit obligation by

$72,000.

Instructions

Compute the amount of prior service cost amortization for the years 2014 through 2019 using the years-of-service method, setting up appropriate schedules.

 

E20-12 (Pension Expense, Journal Entries, Statement Presentation) Ferreri Company received the

following selected information from its pension plan trustee concerning the operation of the company’s

defined benefit pension plan for the year ended December 31, 2014.

January 1, December 31,

2014 2014

Projected benefi t obligation $1,500,000 $1,527,000

Market-related and fair value of plan assets 800,000 1,130,000

Accumulated benefi t obligation 1,600,000 1,720,000

Accumulated OCI (G/L)—Net gain –0– (200,000)

 

The service cost component of pension expense for employee services rendered in the current year amounted to $77,000 and the amortization of prior service cost was $120,000. The company’s actual funding (contributions) of the plan in 2014 amounted to $250,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,200,000 on January 1, 2014. Assume no benefits paid in 2014.

 

Instructions

(a) Determine the amounts of the components of pension expense that should be recognized by the

company in 2014.

(b) Prepare the journal entry to record pension expense and the employer’s contribution to the pensionplan in 2014.

(c) Indicate the pension-related amounts that would be reported on the income statement and the

balance sheet for Ferreri Company for the