On January 1, 2013, Laura's Living Company has the following defined benefit pension plan balances.
Projected benefit obligation $8,800,000
Fair value of plan assets 9,600,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2014, the company amends its pension agreement so that service costs of $350,000 are created. Other data related to the pension plan are as follows.
2013 2014
Service costs $145,000 $156,000
Prior service costs amortization $0 $78,000
Contributions (funding) to the plan $180,000 $232,000
Benefits paid $165,000 $203,000
Actual return on plan assets $960,000 $948,000
Expected rate of return on assets 10% 10%
Required:
(a) Prepare a pension worksheet for the pension plan for 2013 and 2014.
(b) For 2014, prepare the journal entry to record pension-related amounts.