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Required: Prepare a spreadsheet containing all relevant pension information for 20X7 and 20X8.

Required: Prepare a spreadsheet containing all relevant pension information 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
Problem 1Q
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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 $1,655,000 as of 1 January 20X7. The company will pay $206,000 (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 $120,000 20X8 $163,000 7,100 40,000 42,900 Required: Prepare a spreadsheet containing all relevant pension information for 20X7 and 20X8.
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 $1,655,000 as of 1 January 20X7. The company will pay $206,000 (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 $120,000 20X8 $163,000 7,100 40,000 42,900 Required: Prepare a spreadsheet containing all relevant pension information for 20X7 and 20X8.
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