Determining Funded Status, Recording Pension Expense, Preparing Worksheet Rico Corporation initiated a defined benefit pension plan on January 1, 2020. The plan does not provide any retroactive benefits for existing employees. The pension funding payment is made to the trustee on December 31 of each year. The following information is available for 2020 and 2021. 2020 2021 Service cost $75,000 $82,500 Funding payment (contribution) 85,000 92,500 Interest on projected benefit obligation 7,500 Actual and expected return on plan assets
Determining Funded Status, Recording Pension Expense, Preparing Worksheet Rico Corporation initiated a defined benefit pension plan on January 1, 2020. The plan does not provide any retroactive benefits for existing employees. The pension funding payment is made to the trustee on December 31 of each year. The following information is available for 2020 and 2021. 2020 2021 Service cost $75,000 $82,500 Funding payment (contribution) 85,000 92,500 Interest on projected benefit obligation 7,500 Actual and expected return on plan assets
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Determining Funded Status, Recording Pension Expense, Preparing Worksheet
Rico Corporation initiated a defined benefit pension plan on January 1, 2020. The plan does not provide any retroactive benefits for existing employees. The pension funding payment is made to the trustee on December 31 of each year. The following information is available for 2020 and 2021.
| 2020 | 2021 | |
|---|---|---|
| Service cost | $75,000 | $82,500 |
| Funding payment (contribution) | 85,000 | 92,500 |
| Interest on projected benefit obligation | 7,500 | |
| Actual and expected return on plan assets | 9,000 |
- Financial Statement Presentation and Entries
- Pension Worksheet
a. In its December 31, 2020, balance sheet , Rico should report what amount of net pension asset/liability?
b. In its December 31, 2021, balance sheet, Rico should report what amount of net pension asset/liability?
c. Prepare thejournal entries to record pension expense and plan funding for 2021.
| Balance Sheet | |
|---|---|
| December 31, 2020 | |
| Noncurrent assets | |
| Net pension asset |
|
| Noncurrent liabilities | |
| Net pension liability |
|
b. In its December 31, 2021, balance sheet, Rico should report what amount of net pension asset/liability?
| Balance Sheet | |
|---|---|
| December 31, 2021 | |
| Noncurrent assets | |
| Net pension asset |
|
| Noncurrent liabilities | |
| Net pension liability |
|
c. Prepare the
- Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order.
| Date | Account Name | Dr. | Cr. |
|---|---|---|---|
| Dec. 31, 2021 |
|
|
|
|
|
|
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|
|
|
|
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| To reco |
Determining Funded Status, Recording Pension Expense, Preparing Worksheet
Rico Corporation initiated a defined benefit pension plan on January 1, 2020. The plan does not provide any retroactive benefits for existing employees. The pension funding payment is made to the trustee on December 31 of each year. The following information is available for 2020 and 2021.
| 2020 | 2021 | |
|---|---|---|
| Service cost | $75,000 | $82,500 |
| Funding payment (contribution) | 85,000 | 92,500 |
| Interest on projected benefit obligation | 7,500 | |
| Actual and expected return on plan assets | 9,000 |
- Financial Statement Presentation and Entries
- Pension Worksheet
d. Create a worksheet to summarize the pension data at the end of 2021.
| Reported Net in Financial Statements | Reported on Balance Sheet |
Reported in Income Statement |
|||
|---|---|---|---|---|---|
| Plan Assets |
PBO | Net Pension Asset/Liability |
Pension Expense |
||
| Balance, January 1, 2021 |
|
|
|
||
| Service c |
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