On January 1, 2012, Cisco Company had the following defined benefit pension plan balances.
Defined Benefit Obligation $3,000,000
Fair value of Plan Assets $2,300,000
The interest rate applicable to the plan is 8%. On January 1, 2013, the company amended its pension agreement so that past service costs of $370,000 are created.
The following additional data are provided by the actuary.
2012 2013
Service cost 260,000 380,000
Contributions 320,000 350,000
Benefits 150,000 200,000
Actual return on plan assets 184,000 250,000
Instructions
a) Prepare a pension worksheet for the pension plan for 2012 and 2013.
b) Prepare the journal entry for pension expense for 2013.