Question

Pension data for Barry Financial Services Inc. include the following:

	($ in 000s)
Discount rate, 7%
Expected return on plan assets, 8%
Actual return on plan assets, 7%
Service cost, 2018	$	320
January 1, 2018:
Projected benefit obligation		2,350
Accumulated benefit obligation		2,050
Plan assets (fair value)		2,450
Prior service cost–AOCI (2018 amortization, $30)		330
Net gain–AOCI (2018 amortization, $6)		340
There were no changes in actuarial assumptions.
December 31, 2018:
Cash contributions to pension fund, December 31, 2018		255
Benefit payments to retirees, December 31, 2018		280

Required:
1. Determine pension expense for 2018.
2. Prepare the journal entries to record pension expense, gains and losses (if any), funding, and retiree benefits for 2018.

*Record the pension expense.

*Record the gain or loss on assets.

*Record the funding.

*Record the retiree benefits.

Answer 1

1.

Service Cost	$320
Interest Cost (2350*7%)	164.50
Expected rate of return (2450*8%)	(196)
Amortization of prior service cost	30
Amortization of prior net gain	(6)
Pension Expenses	$312.50

2.

For	Account Titles	Debit	Credit
Pension Expense	Pension expense	312.50
	Plan Assets	196
	Amortization of net gain – OCI	6
	Amortization of prior service-cost – OCI		30
	PBO		484.50
Loss on assets	Loss – OCI	24.50
	Plan assets {2450 *(8% - 7%)}		24.50
Funding	Plan assets	255
	Cash		255
Retiree benefits	PBO	280
	Plan assets		280