Horizon Inc. has a defined benefit pension plan. The following pension-related data were available for the current calendar year: PBO: Balance, Jan. 1 $ 235,000 Service cost 36,000 Interest cost (5% discount rate) 11,750 Gain from changes in actuarial assumptions in 2021 (4,500 ) Benefits paid to retirees (15,000 ) Balance, Dec. 31 $ 263,250 Plan assets: Balance, Jan.1 $ 245,000 Actual return (expected return was $22,000) 20,000 Contributions 30,000 Benefits paid (15,000 ) Balance, Dec. 31 $ 280,000 ABO, Dec. 31 $ 239,500 January 1, 2021, balances: Prior service cost–AOCI (amortization $5,075/yr.) 5,075 Net gain–AOCI (amortization, if any, over 15 years) 50,750 There were no other relevant data. Required: 1. Calculate the 2021 pension expense. 2. Prepare the 2021 journal entries to record pension expense and funding. 3. Prepare any journal entries to record any 2021 gains or losses.
Horizon Inc. has a defined benefit pension plan. The following pension-related data were available for the current calendar year:
PBO:
Balance, Jan. 1 $ 235,000
Service cost 36,000
Interest cost (5% discount rate) 11,750
Gain from changes in actuarial assumptions in 2021 (4,500 )
Benefits paid to retirees (15,000 )
Balance, Dec. 31 $ 263,250
Plan assets:
Balance, Jan.1 $ 245,000
Actual return (expected return was $22,000) 20,000
Contributions 30,000
Benefits paid (15,000 )
Balance, Dec. 31 $ 280,000
ABO, Dec. 31 $ 239,500
January 1, 2021, balances:
Prior service cost–AOCI (amortization $5,075/yr.) 5,075
Net gain–AOCI (amortization, if any, over 15 years) 50,750
There were no other relevant data.
Required:
1. Calculate the 2021 pension expense.
2. Prepare the 2021
3. Prepare any journal entries to record any 2021 gains or losses.
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