Question

Sandhill, Inc. received the following information from its pension plan trustee concerning the operation of the...

Sandhill, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2019:

January 1, 2019 December 31, 2019
Projected benefit obligation $2,490,000 $2,840,000
Fair value of plan assets 1,240,000 1,590,000
Accumulated benefit obligation 1,929,000 2,619,000
Accumulated OCI―(PSC) 539,000 299,500


The service cost component for 2019 is $139,500 and the amortization of prior service cost is $239,500. The company's actual funding of the plan in 2019 amounted to $499,000. The expected return on plan assets and the settlement rate were both 9%.

Determine the pension expense to be reported in 2019.

Pension expense

Prepare the journal entry to record pension expense and the employer's contribution to the pension plan in 2019.

Homework Answers

Answer #1
Solution:
1 Pension expense to be reported in 2019
Service cost $139,500
Interest on Projected benefit Obligation $224,100
($2,490,000*9%)
Expected returns ($111,600)
($1,240,000*9%)
Amortization of prior service cost $239,500
Pension expense to be reported in 2019 $491,500
2 Journal Entry
Date Account titles & explanations Debit Credit
2019 Pension Expense $491,500
Pension Asset/Liability $247,000
     Cash $499,000
     Other Comprehensive income(PSC) $239,500
(Being Pension expense recorded)
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