Homework

Name: Jocelyn Terry Date: 03/23/13

Instructor: Dr. William Copeland Course: Intermediate Accounting 3

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

P20-2 Allison Co. has the following postretirement benefit plan balances on January 1, 2012.

Accumulated Postreitrement benefit obligation $2,535,000

Fair value of plan assets 2,535,000

The interest (settlement) rate applicable to the plan is 8% On January 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:

(a) Prepare a worksheet for the postreitrement plan for 2012 & 2013.

Allison Co.

Pension Worksheet—2012 and 2013

General Journal Entries Memo Record

Items "Annual

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

Asset/

Liability" DR/CR Accum Projected Benefit Obligation DR/CR "Plan

Assets" DR/CR

Balance, Jan. 1, 2012 2,535,000 CR 2,535,000 DR

Service cost 80,000 DR 80,000 CR

Interest cost 202,800 DR 202,800 CR

Actual return 200,000 CR 200,000 DR

Unexpected Loss 28,150 CR 28,150 DR

Contributions 47,000 CR 47,000 DR

Benefits 41,000 DR 41,000 CR

Journal entry, 12/31/12 54,650 DR 47,000 CR...