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Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 4%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,695,000 as of 1 January 20X7. The company will pay $222,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8

Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 4%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,695,000 as of 1 January 20X7. The company will pay $222,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 4%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,695,000 as of 1 January 20X7. The company will pay $222,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8 Current service cost Actual return on fund assets Decrease in defined benefit obligation at year-end due to change in assumptions Payments to pensioners at end of year 20X7 $128,000 $179,000 20X8 7,900 48,000 46,900 Required: Prepare a spreadsheet containing all relevant pension Information for 20X7 and 20X8. Answer is not complete. Net Pension Obligation Plan Assets Pension Expense pension Asset AOCI (Liab) 20X7 Beginning - PSC CSC $ 1,695,000 $ 1,695,000 S 0 Net interest 128,000 67,800 128,000 67,800 0 0 Funding Ending balance 20X8 CSC Net interest 222,000 128,000 $ 1,890,800 S 350,000 179,000 179,000 75,632 14,000 61,632 240,632 Actual return versus expected (6,100) Revaluation 48,000 6,100 48,000 6.100 48,000 Benefits paid 46,900 (46,900) 222,000 Funding 179,000 Ending balance S 712,000 S 41.900
Transcribed Image Text:Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 4%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,695,000 as of 1 January 20X7. The company will pay $222,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8 Current service cost Actual return on fund assets Decrease in defined benefit obligation at year-end due to change in assumptions Payments to pensioners at end of year 20X7 $128,000 $179,000 20X8 7,900 48,000 46,900 Required: Prepare a spreadsheet containing all relevant pension Information for 20X7 and 20X8. Answer is not complete. Net Pension Obligation Plan Assets Pension Expense pension Asset AOCI (Liab) 20X7 Beginning - PSC CSC $ 1,695,000 $ 1,695,000 S 0 Net interest 128,000 67,800 128,000 67,800 0 0 Funding Ending balance 20X8 CSC Net interest 222,000 128,000 $ 1,890,800 S 350,000 179,000 179,000 75,632 14,000 61,632 240,632 Actual return versus expected (6,100) Revaluation 48,000 6,100 48,000 6.100 48,000 Benefits paid 46,900 (46,900) 222,000 Funding 179,000 Ending balance S 712,000 S 41.900
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