Defined Pension Benefit Plans

Defined Pension Benefit Plans 1) On 1/1/2012, Stuart Company has the following defined pension plan balances. Projected benefits Obligation $5,600,000 Fair Value of Plan Assets $6,400,000The interest (Settlement) rate applicable to the plan is 9%. On 1/1/2013, the company amends its pension agreement so that service costs of $620,000 are created. Other data related to the pension plan are as follows: 2012 2013Service Costs $180,000 $195,000Prior Service Costs Amortization 0 $97,000Contributions (funding) to the plan $255,000 $305,000Benefits Paid $225,000 $300,000Actual Return on Plan Assets $320,000 $515,000Expected Rate of Return on Assets 5% 8%Instructions:a) Prepare a pension worksheet for the pension plan for 2012 and 2013. Harrington Company Pension Worksheet – 2012 and 2013 General Journal Entries Memo Record Items Annual Pension Cash OCI-Prior OCI-Pension Projected Benefit Plan Expense Service Cost Gain/Loss Asset/Liability Obligation AssetsBalance 1/1/2012a) Service Costb) Interest Costc) Actual Returnd) Contributionse) BenefitsJournal entry, 12/31/12Accum. OCI 12/31/11Balance, 12/31/2012f) Additional PSC 1/1/2013g) Service Costh) Interest Costi) Actual Returnj) Unexpected lossk) Amortization of PSCl) Contributionsm) BenefitsJournal Entry, 12/31/13Accum. OCI, 12/31/12Balance, 12/31/2013b) For 2013, prepare the journal entry to record pension-related amounts2) Jones Co. has the following post-retirement benefit plan balances on 1/1/2012Accumulated Postretirement benefit obligation $2,535,000Fair Value of Plan Assets $2,535,000The Interest (settlement) rate applicable to the plan is 8%. On 1/1/2013, the company amends the plan so that prior service costs of $185,000 were created. Other data related to the pension plan are as follows: 2012 2013Service Costs $80,000 $87,000Prior Service Costs Amortization $0 $13,000Contributions (funding) to the plan $47,000 $38,000Benefits Paid $41,000 $43,000Actual Return on Plan Assets $200,000 $155,000Expected Rate of Return on Assets 9% 7%Instructions:Prepare a worksheet for the postretirement plan for 2012 & 2013 Jones Co. Pension Worksheet – 2012 & 2013 General Journal Entries Memo RecordItems Annual DR/ Cash DR/ OCI- Prior DR/ OCI- DR/ Pension DR/ Accum DR/ Plan DR/ Expense CR CR Service Cost CR Gain/Loss CR Asset/ CR Projected CR Assets CR Liability Benefit ObligationBalance, 1/1/2012Service CostInterest CostActual ReturnUnexpected LossContributionsBenefitsJournal Entry, 12/31/12Accum OCI, 12/31/11Balance 12/31/2012Additional PSC, 1/1/2013Balance 1/1/2013Service CostInterest CostActual ReturnUnexpected lossAmortization of PSCContributionsBenefitsJournal Entry, 12/31/13Accum OCI, 12/31/12Balance, 12/31/2013b) Prepare any journal entries related to the postretirement plan that would be needed at 12/31/2012c) Prepare any journal entries related to the postretirement