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Question: Amherst City provides a defined benefit pension plan for employees of the city electric utility,...

Question: Amherst City provides a defined benefit pension plan for employees of the city electric utility, an enterprise fund. Assume that the projected level of earnings on plan investments is $196,000, the service cost component is $255,000, and interest on the pension liability is $163,000 for the year. Actual returns on plan assets for the year were $179,000, and the City is amortizing a deferred outflow resulting from a change in plan assumptions from a prior year in the amount of $7,100 per year. Please help explaining how to prepare journal entries to record annual pension expense for the enterprise fund

Record entry for pension expense

Record entry for additional pension liability

Record entry for amortization of deferred outflow resulting from change in pension plan assumptions

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Answer #1
Projected Earnings on Plan Investment 196000
Actual return on plan investments 179000 375000
Service Cost Component 255000
Interest on pension liability 163000 418000
Additional Liability 43000
Change in Actual Outflow due to wrong assumptions 7100
Pension Expense Dr. 255000
To OCI 255000
OCI Dr. 43000
To Pension Liability 43000
OCI Dr. 7100
To Pension Liability 7100
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