Question

I need a journal entry for this. Thanks!

15	ABC Corporation provides a defined benefit pension plan for its employees. A combination adjusting entry should be made to correctly account for this type of pension
	plan given the following items of information for the 2014 plan year, including the recording of pension expense and the employer's contribution to the pension plan in 2014.
	Note: Use the summary entry method as demonstrated and discussed in the chapter lectures on pension accounting to prepare the adjusting entry.
	Pension asset/liability (January 1)			$0
	Actual return on plan assets			$40,000
	Expected return on plan assets			$20,000
	Contributions (funding) in 2014			$37,000
	Fair value of plan assets (December 31)			$75,000
	Settlement rate			10%
	Projected benefit obligation (January 1)			$0
	Service cost			$60,000
	Benefits paid in 2014			$0
	*For purposes of financial statement presentation, consider Pension Expense as an operating item and any resulting Pension Asset/Liability as long-term in nature.

Answer 1

Answer-Journal Entry:-

Date	Account Title and Explanation	Debit ($)	Credit ($)
	Pension Expenses	40,000
	Pension related assets/ liability	12,000
	Accumulated other comprehensive income
	( Fair market value- service cost) ($75,000-$60,000)		15,000
	Cash (contribution made)		37,000

Working Note:-

a-Fair market value of the pension assets in the following manner:-

Description	Amount
Pension asset, opening	-
Add: Employee contribution	$37,000
Add: Actual return on plan assets	$40,000
Less: Benefits paid	-
Fair market value at the end of the year	$75,000

b-pension expenses:-

Description	Amount
Service cost	$60,000
Less: Actual return	($40,000)
Add: Deferred gain ($40,000-$20,000)	$20,000
Pension Expenses	$40,000