Exercise 2011 Sage Company sponsors a defined benefit pensio

Exercise 20-11 Sage Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2017 in which no benefits were paid 1. The actuarial present value of future benefits earned by 2. The company\'s funding policy requires a contribution to the 3. As of January 1, 2017, the company had a projected benefit employees for services rendered in 2017 amounted to $56,400 pension trustee amounting to $144,392 for 2017. obligation of $898,800, an accumulated benefit obligation of $803,800, and a debit balance of $398,900 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $601,100 at the beginning of the year. The actual and expected return on plan assets was $54,200. The settlement rate was 9%. No gains or losses occurred in 2017 and no benefits were paid. 4. Amortization of prior service cost was $50,400 in 2017 Amortization of net gain or loss was not required in 2017.

Solution

a) Pension expense for 2017 Components of Pension expense Service cost $56,400.00 Interest on defined benefit obligation (898,800 x 9%) $80,892.00 Expected return on plan assets -$54,200.00 Amortization of prior service cost $50,400.00 Pension expense $133,492.00 b) journal entry or entries to record pension expense and the employer\'s contribution Account Titles and Explanation Debit Credit Pension Expense $133,492.00 Pension Asset /Liability (balancing figure) $61,300.00                  Cash $144,392.00                  Other Comprehensive Income (PSC) $50,400.00 c) Sage Company Income Statement (Partial) For the year ended December 31, 2017 Expenses: Pension Expense $133,492.00 d) Sage Company Comprehensive Income Statement For the year ended December 31, 2017 Net Income / (Loss) XXXXX Other Comprehensive Income Amortization of PSC $50,400.00 Comprehensive Income XXXXX e) Sage Company Balance Sheet (Partial) December 31, 2017 Long-term Liabilities Pension Liability ($1036092 - 799692) $236,400.00 Stockholders\' Equity Accumulated Other Comprehensive Income (PSC) (398900 - 50400) $348,500.00 Partial worksheet Plan Assets PBO Bal. January 1, 2017 $601,100.00 $898,800.00 Service cost $56,400.00 Interest on PBO $80,892.00 Actual Return $54,200.00 Contribution $144,392.00 Bal. December 31,2017 $799,692.00 $1,036,092.00