On January 1, 2014, Harrington Company has the following defined benefit pension plan balances.
Projected benefit obligation $4,500,000
Fair value of plan assets 4,200,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its pension agreement so that prior service costs of $500,000 are created. Other data related to the pension plan are as follows.
|
Service cost
|
2014
|
|
2015
|
|
$150,000
|
|
$180,000
|
|
|
Prior service cost amortization
|
-0-
|
|
90,000
|
|
Contributions (funding) to the plan
|
240,000
|
|
285,000
|
|
Benefits paid
|
200,000
|
|
280,000
|
|
Actual return on plan assets
|
252,000
|
|
260,000
|
|
Expected rate of return on assets
|
6%
|
|
8%
|
(a) Prepare a pension worksheet for the pension plan for 2014 and 2015.
(b) For 2015, prepare the journal entry torecord pension-related amounts.