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Problem: Presented below is information related to major Department stores, Inc. pension plan for 2008
Accumulated benefit obligation (at year -end) $600,000
Service cost 520,000
Funding contribution for 2008 500,000
Settlement rate used in actuarial computation 10%
Expected return on plant assets 9%
Amortization of PSC (due to benefit increase) 100,000
Amortization of net gains 48,000
Projected benefit obligation (at beginning of period) 480,000
Market-related (and fair) value of plan assets (at the beginning of period)$360,000
Instructions:
Q1. Compute the amount of pension expense to be reported for 2008 (show computations)
Q2. Prepare the journal entry to record pension expense and the employer's contribution for 2008. Assume no new actuarial gains/losses were experienced and that actual returns on assets equaled expected return.