Task: (Pension Expense, Minimum Liability, Journal Entries for 2 Years)
Mantle Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2007 and 2008.
2007 2008
Plan assets (fair value), December 31 $380,000 $465,000
Projected benefit obligation, January 1 600,000 700,000
Prepaid/(accrued) pension cost balance, January 1 (40,000) ?
Unrecognized prior service cost, January 1 250,000 240,000
Service cost 60,000 90,000
Actual and expected return on plan assets 24,000 30,000
Amortization of prior service cost 10,000 12,000
Contributions (funding) 110,000 120,000
Accumulated benefit obligation, December 31 500,000 550,000
Additional pension liability balance, January 1 50,000 ?
Interest/settlement rate 9% 9%
Instructions:
Q1. Compute pension expense for 2007 and 2008.
Q2. Prepare the journal entries to record the pension expense and the company's funding of the pension plan for both years.
Q3. Compute the minimum liability for 2007 and 2008.
Q4. Prepare the journal entries to record the minimum liability for both years.