E19-1 Pension Expense
The Bailey Company has had a defined pension plan for several years. At the end of 2013, Bailey's actuary provided the following information for 2013 regarding the pension plan: (1) service cost, $115,000; (2) expected return on plan assets, $14,000; (3) amortization of net loss, $2,000; (4) interest on projected benefit obligation, $16,000; (5) amortization of prior service costs, $4,000. Bailey decides to fund an amount at the end of 2013 equal to its pension expense.
1. Compute the amount of Bailey's pension expense for 2013 and prepare related journal entry.
2. If Bailey had decided to fund an amount less than the 2013 pension expense how would the company's balance sheet be affected?on cost liability at the end of 2012. Verna contributed $128,000 to the pension plan at the end of 2013. Compute the amount Verna's pension expense for 2013 and prepare the related journal entries.