Exercise 204 The following facts apply to the pension plan o

Exercise 20-4 The following facts apply to the pension plan of Pharoah Inc. for the year 2017. $501,700 501,700 Plan assets, January 1, 2017 Projected benefit obligation, January 1, 2017 Settlement rate Service cost Contributions (funding) Actual and expected return on plan assets Benefits paid to retirees 8% 43,600 25,400 52,100 33,600

Solution

Pension Worksheet :-

* Interest Cost = $501700*8% = $40136

Items	Annual Pension Exp.	Cash	Pension Asset/Liability	Defined Benefit Obligation	Plant Assets
Balance jan. 1				$501700 Cr.	$501700 Dr.
Service Cost	$43600 Dr.			$43600 Cr.
Interest Cost*	$40136 Dr.			$40136 Cr.
Actual Return	$52100 Cr.				$52100 Dr.
Contributions		$25400 Cr.			$25400 Dr.
Benefirs				$33600 Dr.	$33600 Cr.
Journal entry, Dec.31	$31636 Dr.	$25400 Cr.	$6236 Cr.
Balance Dec. 31			$6236 Cr.	$551836 Cr.	$545600 Dr.