Question

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

	($ in thousands)
Discount rate, 7%
Expected return on plan assets, 8%
Actual return on plan assets, 7%
Service cost, 2021	$	320
January 1, 2021:
Projected benefit obligation		2,350
Accumulated benefit obligation		2,050
Plan assets (fair value)		2,450
Prior service cost—AOCI (2021 amortization, $30)		330
Net gain—AOCI (2021 amortization, $6)		340
There were no changes in actuarial assumptions.
December 31, 2021:
Cash contributions to pension fund, December 31, 2021		255
Benefit payments to retirees, December 31, 2021		280

Required:
1. Determine pension expense for 2021.
2. Prepare the journal entries to record (a) pension expense, (b) gains and losses (if any), (c) funding, and (d) retiree benefits for 2021.

Answer 1

1)Pension expense for 2021 for is as follows:

	$
Service Cost	320
Interest Cost ($2,350*7%)	165
Expected Return on plan Assets(2,450*8%)	(196)
Amortization of Prior Service Cost	30
Amortization Net Gain	( 6)
Pension expense	$313

2) Journal entries are as follows:

Sr.No.	Account and Explanation	Debit($)	Credit($)
1	Pension Expenses	313
	Expected Return on plan Assets	196
	Amortization Net Gain	6
	Amortization of Prior Service Cost		30
	Projected Benefit Obligation(PBO)		485
	(Recorded the pension expenses )
2)	Loss on plan asset( 196 - $2,450*7%)	25
	Plan asset		25
	(Recorded the loss on plan asset)
3)	Plan Asset	330
	Cash		330
	( Recorded the plan asset paid)
4)	Projected Benefit Obligation(PBO)	280
	Plan Asset		280
	(Recorded the retire benefit)