Defined pension benefit plans | Business & Finance homework help

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 $6,400,000

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The 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 2013
Service Costs $180,000 $195,000
Prior Service Costs Amortization 0 $97,000
Contributions (funding) to the plan $255,000 $305,000
Benefits Paid $225,000 $300,000
Actual Return on Plan Assets $320,000 $515,000
Expected 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 Assets
Balance 1/1/2012
a) Service Cost
b) Interest Cost
c) Actual Return
d) Contributions
e) Benefits
Journal entry, 12/31/12
Accum. OCI 12/31/11
Balance, 12/31/2012
f) Additional PSC
1/1/2013
g) Service Cost
h) Interest Cost
i) Actual Return
j) Unexpected loss
k) Amortization of PSC
l) Contributions
m) Benefits
Journal Entry, 12/31/13
Accum. OCI, 12/31/12
Balance, 12/31/2013

b) For 2013, prepare the journal entry to record pension-related amounts

2) Jones Co. has the following post-retirement benefit plan balances on 1/1/2012
Accumulated Postretirement benefit obligation $2,535,000
Fair Value of Plan Assets $2,535,000

The 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 2013
Service Costs $80,000 $87,000
Prior Service Costs Amortization $0 $13,000
Contributions (funding) to the plan $47,000 $38,000
Benefits Paid $41,000 $43,000
Actual Return on Plan Assets $200,000 $155,000
Expected 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 Record
Items 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
Obligation
Balance, 1/1/2012
Service Cost
Interest Cost
Actual Return
Unexpected Loss
Contributions
Benefits
Journal Entry, 12/31/12
Accum OCI, 12/31/11
Balance 12/31/2012
Additional PSC, 1/1/2013
Balance 1/1/2013
Service Cost
Interest Cost
Actual Return
Unexpected loss
Amortization of PSC
Contributions
Benefits
Journal Entry, 12/31/13
Accum OCI, 12/31/12
Balance, 12/31/2013

b) Prepare any journal entries related to the postretirement plan that would be needed at 12/31/2012

c) Prepare any journal entries related to the postretirement

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