Acct557 W3 Hw

Name: Date:

Instructor: Course:

Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield

On January 1, 2012, Harrington Company has the following defined benefit pension plan balances.

Projected benefits obligation $5,600,000

Fair value of plan assets 6,400,000

The interest (settlement) rate applicable to the plan is 9% On January 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

Expense" Cash OCI - Prior Service Cost OCI - Gain/Loss "Pension

Asset/

Liability" "Projected

Benefit

Obligation" "Plan

Assets"

Balance, Jan. 1, 2012 800,000 (5,600,000) 6,400,000

(a) Service cost 180,000 (180,000)

(b) Interest cost 504,000 (504,000)

(c) Actual return (320,000) 320,000

(d) Contributions (255,000) 255,000

(e) Benefits 225,000 (225,000)

Journal entry, 12/31/12 364,000 (255,000) 0 0 (109,000)

Accum OCI, 12/31/11

Balance, Dec. 31, 2012 691,000 (6,059,000) 6,750,000

(f) Additional PSC 620,000 (620,000)

January 1, 2013 (6,679,000)

(g) Service cost 195,000 (195,000)

(h) Interest cost 601,110 (601,110)

(i) Actual return (515,000) 515,000

(j) Unexpected loss (25,000) 25,000

(k)...