Question - On January 1, 2012, Harrington Company has the following defined benefit pension plan balances.
Projected benefits obligation $5,600,000
Fair value of plan assets 6,400,000
The interest (settlement) rate applicable to the plan is 9%. On January 1, 2013, the company amends its pension agreement so that service costs of $620,000 are created. Other data related to the pension plan are as follows:
2012 2013
Service costs $180,000 $195,000
Prior service costs 0 97,000 amortization
Contributions (funding) 255,000 305,000 to the plan
Benefits paid 225,000 300,000
Actual return on plan 320,000 515,000 assets
Expected rate of return 5% 8% on assets
Instructions:
(a) Prepare a pension worksheet for the pension plan for 2012 and 2013.
(b) For 2013, prepare the journal entry to record pension-related amounts.