Hobbs Co. has the following defined benefit pension plan balances on January 1, 2012.
|
Projected benefit obligation
|
$4,600,000
|
|
Fair value of plan assets
|
4,600,000
|
|
|
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2013, the company amends its pension agreement so that prior service costs of $600,000 are created. Other data related to the pension plan are:
|
2012
|
2013
|
|
Service cost
|
$150,000
|
$170,000
|
|
Prior service cost amortization
|
-0-???
|
90,000
|
|
Contributions (funding) to the plan
|
200,000
|
184,658
|
|
Benefits paid
|
220,000
|
280,000
|
|
Actual return on plan assets
|
252,000
|
350,000
|
|
Expected rate of return on assets
|
6%
|
8%
|
|
|
Instructions
| (a) |
Prepare a pension worksheet for the pension plan in 2012.
|
| (b) |
Prepare any journal entries related to the pension plan that would be needed at December 31, 2012.
|
| (c) |
Prepare a pension worksheet for 2013 and any journal entries related to the pension plan as of December 31, 2013.
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| (d) |
Indicate the pension-related amounts reported in the 2013 financial statements.
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