The following data relate to the operation of Kramer Co.’s pension plan in 2018. The pension worksheet for 2017 is provided in P20-10. Service cost $59,000 Actual return on plan assets 32,000 Amortization of prior service cost 28,000 Annual contributions 51,000 Benefits paid retirees 27,000 Average service life of all employees 25 years For 2018, Kramer will use the same assumptions as 2017 for the expected rate of returns on plan assets. The settlement rate for 2018 is 10%. Instructions (a) Prepare a pension worksheet for 2018 and accompanying computations and amortization of the loss, if any, in 2018 using the corridor approach. (b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31. (c) Indicate the pension amounts reported in the financial statements.

Particulars

Annual pension expense

Cash

OCI-Prior service cost

OCI-Gain/Loss

Pension asset/liability

Projected benefit obligation

Plan assets

Balance Jan 1, 2018

.

$150,500 Cr.

$399,500 Cr.

$249,000 Dr.

Service cost

$59,000 Dr.

$59,000 Cr.

Interest cost

$39,950 Dr.

$39,950 Cr.

Actual return

$32,000 Cr.

$32,000 Dr.

Unexpected gain

$7,100 Cr.

$7,100 Dr.

Amortization of PSC

$28,000 Dr.

$28,000 Cr.

Amortization of loss

$\left(\frac{\mathbf{\$}\mathbf{46}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{\$}\mathbf{39}\mathbf{,}\mathbf{950}}{\mathbf{25}\mathbf{years}}\right)$

$242 Dr.

$242 Cr.

Contributions

$51,000 Cr.

$51,000 Dr.

Benefits

$27,000 Dr.

$27,000 Cr.

Journal entry for 2018

$102,292 Dr.

$51,000 Cr.

$28,000 Cr.

$7,342Cr.

$15,950 Cr.

Accumulated OCI Dec 31, 2017

$45,000 Dr.

$46,000 Dr.

Balance Dec 31, 2018

$17,000 Dr.

$38,658Dr.

$166,450 Cr.

$471,450Cr.

$305,000 Dr.

Date

Particulars

Debit

Credit

2018

Pension Expense

$102,292

Pension asset/liability

$15,950

Other comprehensive income (PSC)

$28,000

Other comprehensive income (gain/loss)

$7,342

Cash

$51,000

(To record the pension expense)

Particulars

Amount

Pension expense

$102,292

Particulars

Amount

Net Income

-

Other comprehensive loss

Asset gain/loss

$7,100

Amortization of loss

$242

Prior service cost amortization

$28,000

$35,342

Comprehensive Income

-

Liabilities

Amount

Pension liability

$166,450

Stockholder’s Equity

Accumulated other comprehensive loss (PSC)

$17,000

Accumulated other comprehensive loss (Gain/Loss)

$38,658