The following information relates to John and Margie Company limited. The company adopts a pension plan on January 1, 2019. No retroactive benefits are granted to employees. The service cost each year is as follows: 2019, Ksh 400,000; 2020, Ksh 420,000; and 2021, Ksh 432,000. The projected benefit obligation at the beginning of each year is as follows: 2020, Ksh 400,000; and 2021, Ksh 840,000. The discount rate is 10% The expected long-term rate of return on plan assets is 10%, which is equal to the actual rate of return. The Company adopts a policy of funding an amount equal to the pension expense and makes the payment to the funding agency at the end of each year. Plan assets are based on the amounts contributed each year, plus a return of 10% per year, less an assumed payment of Ksh, 20,000 at the end of each year to retired employees (beginning in 2020). Required: Calculate the pension expense for the three years and prepare the journal entries for each year to be used to post the same in the books of John and Margie Company limited. (Remember to show your workings)
The following information relates to John and Margie Company limited.
The company adopts a pension plan on January 1, 2019. No retroactive benefits are granted to employees.
The service cost each year is as follows: 2019, Ksh 400,000; 2020, Ksh 420,000; and 2021, Ksh 432,000.
The projected benefit obligation at the beginning of each year is as follows: 2020, Ksh 400,000; and 2021, Ksh 840,000.
The discount rate is 10%
The expected long-term
The Company adopts a policy of funding an amount equal to the pension expense and makes the payment to the funding agency at the end of each year.
Plan assets are based on the amounts contributed each year, plus a return of 10% per year, less an assumed payment of Ksh, 20,000 at the end of each year to retired employees (beginning in 2020).
Required: Calculate the pension expense for the three years and prepare the
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