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Class10 - Solutions

Class10 - Solutions - EXERCISE 20-1(a Computation of...

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EXERCISE 20-1 (a) Computation of pension expense: Service cost ............................................. $ 60,000 Interest cost ($500,000 x .10) ................. 50,000 Expected return on plan assets ............. (12,000) Prior service cost amortization .............. 8,000 Pension expense for 2010 ...................... $106,000 (b) Pension Expense ............................................ 106,000 Cash .......................................................... 95,000 Pension Asset /Liability .......................... 3,000 Other Comprehensive Income (PSC) .... 8,000 1
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EXERCISE 20-4 2 Trudy Borke Inc. Pension Worksheet—2011 General Journal Entries Memo Record Items Annual Pension Expense Cash Pension Asset / Liability Projected Benefit Obligation Plan Assets Balance, January 1, 2011 490,000 Cr. 490,000 Dr. Service cost 40,000 Dr. 40,000 Cr. Interest cost* 41,650 Dr. 41,650 Cr. Actual return** 49,700 Cr. 49,700 Dr. Contributions 30,000 Cr. 30,000 Dr. Benefits 33,400 Dr. 33,400 Cr. Journal entry, December 31 31,950 Dr. 30,000 Cr. 1,950 Cr. Balance, December 31, 2011 1,950 Cr. 538,250 Cr. 536,300 Dr. *$41,650 = $490,000 x .085. **Note : We show actual return on the worksheet to ensure that plan assets are properly reported. If expected and actual return differ, then an additional adjustment is made to compute the proper amount of pension expense.
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EXERCISE 20-7 3 Doreen Corp.
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