Question

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

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