Pension data for Barry Financial Services Inc. include the following: ($ in 000s) Discount rate, 7% Expected return on plan assets, 10% Actual return on plan assets, 9% Service cost, 2018 $ 310 January 1, 2018: Projected benefit obligation 2,300 Accumulated benefit obligation 2,000 Plan assets (fair value) 2,400 Prior service cost–AOCI (2018 amortization, $25) 325 Net gain–AOCI (2018 amortization, $6) 330 There were no changes in actuarial assumptions. December 31, 2018: Cash contributions to pension fund, December 31, 2018 245 Benefit payments to retirees, December 31, 2018 270 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.

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Dryomys Dryomys · Answer 1 · 2019-11-05T09:21:53+01:00

Answer:

$250

Explanation:

(i) Pension expense for 2018:

= Service Cost + Interest Cost - Expected rate of return + Amortization of prior service cost - Amortization of prior net gain

= $310 + (2,300 × 7%) - ($216 actual + $24 loss) + $25 - $6

= $310 + $161 - $240 + $25 - $6

= $250

(ii) (a)

Pension expense A/c Dr. $250

Plan Assets A/c Dr. $240

Amortization of net gain – OCI A/c Dr. $6

To Amortization of prior service-cost – OCI $25

To PBO $471

(To record pension expense)

(b) Loss – OCI A/c Dr. $24

To plan assets $24

(To record the loss on assets)

(c) Plan assets A/c Dr. $245

To cash $245

(To record funding amount)

(d) PBO A/c Dr. $270

To plan assets $270

(To record retiree benefits)