Task: Prepare the following:
1. Pension worksheets for the Simpson Company for years ended December 31, 2001 and 2002.
2. Journal entries to record the pension expense for both years.
3. A reconciliation schedule for both years.
ASSUMPTIONS FOR 2001:
plan assets, Jan 1, 2001 $450,000.00
Projected benefit obligation, Jan 1, 2001 $450,000.00
Annual service cost for 2001 $ 27,000.00
Settlement rate for 2001 7%
Actual return on plan assets for 2001 $ 30,000.00
Contributions for 2001 $ 32,000.00
Benefits paid to retirees during 2001 $ 17,000.00
Prepaid/Accrued cost, Jan 1, 2001 $ 0.00
ASSUMPTIONS FOR 2002:
Present value of prior years service cost
benefits granted Jan 1, 2002 $ 42,000.00
Annual service cost for 2002 $ 28,000.00
Settlement rate for 2002 7%
Actual return on plan assets for 2002 $ 31,000.00
Contributions for 2002 $ 29,000.00
Benefits paid to retirees during 2002 $ 24,000.00
Amortization of prior years service costs $ 17,500.00