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Chapter 20: E20-20 (page 1168)

Using the information in E20-19, prepare a worksheet inserting January 1, 2017, balances, and showing December 31, 2017, balances. Prepare the journal entry recording postretirement benefit expense.

Short Answer

Expert verified

A pension worksheet is atabular representation of the total components of the pension plan. This worksheet shows theeffect of each component on the pension amount.

Step by step solution

01

Pension worksheet for the year January 1, 2017.

Kreter Co.
Pension Worksheet at January 1, 2017
General journal entries
Memo record

Particulars

Annual postretirement expense

Cash

Pension asset/liability

Annual projected benefit obligation

Plan assets

Balance Jan 1, 2017

$220,000 Cr.

$330,000 Cr.

$110,000 Dr.

Service cost

$45,000 Dr.

$45,000 Cr.

Interest cost

$26,400 Dr.

$26,400 Cr.

Actual return

$11,000 Cr.

$11,000 Dr.

Contributions

$10,000 Cr.

$10,000 Dr.

Benefits

$20,000 Dr.

$20,000 Cr.

Journal Entry for 2017

$60,400 Dr.

$10,000 Cr.

$50,400 Cr.

Balance Dec 31, 2017

$270,400 Cr.

$381,400 Cr.

$111,000 Dr.

02

Journal entry to record the postretirement benefit expense for 2017.

Kreter Co.
Journal Entry

Date

Particulars

Debit

Credit

2017

Postretirement expense

$60,400

Postretirement asset/liability

$50,400

Cash

$10,000

(To record the postretirement expense)


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Most popular questions from this chapter

Garner Inc. provides the following information related to its postretirement benefits for the year 2017. Accumulated postretirement benefit obligation at January 1, 2017 $710,000 Actual and expected return on plan assets 34,000 Prior service cost amortization 21,000 Discount rate 10% Service cost 83,000

Instructions Compute postretirement benefit expense for 2017.

Using the information in E20-2, prepare a pension worksheet inserting January 1, 2017, balances, showing December 31, 2017, balances, and the journal entry recording pension expense.

Identify the five components that comprise pension expense. Briefly explain the nature of each component.

Larson Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2018, the following balances related to this plan. Plan assets (market-related value) \(270,000 Projected benefit obligation 340,000 Pension asset/liability 70,000 Cr. Prior service cost 90,000 OCI—Loss 39,000

As a result of the operation of the plan during 2018, the actuary provided the following additional data for 2018. Service cost \)45,000 Actual return on plan assets 27,000 Amortization of prior service cost 12,000 Contributions 65,000 Benefits paid retirees 41,000 Settlement rate 7% Expected return on plan assets 8% Average remaining service life of active employees 10 years Instructions (a) Compute pension expense for Larson Corp. for the year 2018 by preparing a pension worksheet that shows the journal entry for pension expense. (b) Indicate the pension amounts reported in the financial statements

At the end of the current period, Agler Inc. had a projected benefit obligation of \(400,000 and pension plan assets (at fair value) of \)350,000. What are the accounts and amounts that will be reported on the company’s balance sheet as pension assets or pension liabilities?
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