Prepare the journal entries required to report the accountin

Prepare the journal entries required to report the accounting for the company’s pension plan for 2017. (Round answers to 0 decimal places, e.g. 2,525. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

Coronado Inc. has sponsored a noncontributory, defined benefit pension plan for its employees since 1994. Prior to 2017, cumulative net pension expense recognized equaled cumulative contributions to the plan. Other relevant information about the pension plan on January 1, 2017, is as follows. 1. The company has 200 employees. All these employees are expected to receive benefits under the plan. The average remaining service life per employee is 12 years. 2. The projected benefit obligation amounted to $4,920,000 and the fair value of pension plan assets was $3,044,000. The market-related asset value was also $3,044,000. Unrecognized prior service cost was $1,876,000. On December 31, 2017, the projected benefit obligation and the accumulated benefit obligation were $4,920,000 and $3,995,000, respectively. The fair value of the pension plan assets amounted to $4,183,000 at the end of the year. A 10% settlement rate and a 10% expected asset return rate were used in the actuarial present value computations in the pension plan. The present value of benefits attributed by the pension benefit formula to employee service in 2017 amounted to $203,000. The employer’s contribution to the plan assets amounted to $787,000 in 2017. This problem assumes no payment of pension benefits. Prepare a schedule, based on the average remaining life per employee, showing the prior service cost that would be amortized as a component of pension expense for 2017, 2018, and 2019. (Round answers to 0 decimal places, e.g. 2,525.) Prior Service Cost Amortization 2017 $ 2018 $ 2019 $ Compute pension expense for the year 2017. (Round answers to 0 decimal places, e.g. 2,525.) Pension expense $ Compute the amount of the 2017 increase/decrease in net gains or losses and the amount to be amortized in 2017 and 2018. (Round answers to 0 decimal places, e.g. 2,525.) Net gain 12/31/17 $ Amortization in 2017 $ Amortization in 2018 $ Prepare the journal entries required to report the accounting for the company’s pension plan for 2017. (Round answers to 0 decimal places, e.g. 2,525. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

Solution

Part 1) The prior service cost amortization table is given below: Prior Service Cost Amortization 2017 156333 ($1876000/12) 2018 156333 ($1876000/12) 2019 156333 ($1876000/12) _______ Part 2) The pension expense for year 2017 is calculated as follows: Service Cost 203,000 Interest on Projected Benefit Obligation (4920000*10%) 492,000 Actual Return on Plan Assets (4183000-3044000-787000) -352000 Unexpected Gain (3,044,000*10% - 352,000) 47,600 Amortization of Prior Service Cost 156,333 Pension Expense $546,933 Part 3) The value of net gain is calculated as follows: Fair Value of Plan Assets 31/12/2017 4,183,000 Less Expected Fair Value of Assets Add Fair Value of Plan Assets 01/01/2017 3,044,000 Expected Return (3,044,000*10%) 304,400 Contributions to the Plan 787,000 Less Benefits 0 4,135,400 Asset Gain -47,600 Projected Benefit Obligation 31/12/2017 4,920,000 Less Projected Benefit Obligation 01/01/2017 4,920,000 Add Interest (4920,000*10%) 492,000 Add Service Cost 203,000 Less Benefits 0 5,615,000 Liability Gain -695,000 Net Gain ($742,600) The value of Amortization in 2017 and 2018 is calculated as follows: Year Projected Benefit Obligation Fair Value of Plan Assets Corridor Accumulated Other Comprehensive Income 2017 4,920,000 3,044,000 492,000 0 2018 4,920,000 4,183,000 492,000 -742,600 Part 4) The journal entries are as follows: Account Titles and Explanation Debit Credit Pension Expense $546,933 Pension Asset/Liability [1876000 - (4920,000 - 4183000)] $1,139,000 Other Comprehensive Income (G/L) $742,600 Other Comprehensive Income (PSC) $156,333 Cash $787,000