Question

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.

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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