The following information relates to the definedbenefit pension plan for the Citywide Company forthe year ending December 31, 2018:Present value of benefit obligation, January 1P6,900,000Present value of benefit obligation, December 317,793,500Fair value of plan assets, January 17,552,500Fair value of plan assets, December 318,347,500Employer contribution637,500Benefits paid to retirees585,000Settlement rate10%Ceiling -- January 1300,000How much would be the net pension costfor the year 2018?

Expected return = Beginning fair value of plan assets x discount rate = 7552500 x 10% = 755250

Answered: The following information relates to…

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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Wildhorse Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2020 and 2021. 2020 2021 Plan assets (fair value), December 31 $817,830 $993,330 Projected benefit obligation, January 1 819,000 936,000 Pension asset/liability, January 1 163,800 Cr. ? Prior service cost, January 1 292,500 280,800 Service cost 70,200 105,300 Actual and expected return on plan assets 28,080 35,100 Amortization of prior service cost 11,700 14,040 Contributions (funding) 134,550 140,400 Accumulated benefit obligation, December 31 585,000 643,500 Interest/settlement rate 10 % 10 % Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.
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