Zara Clothing has a defined benefit pension plan for its employees. As of December 31, 2012, the balance in the projected benefit obligation (PBO) was $6,000,000, and the fair value of the plan assets was $4,500,000. On December 31, 2012, the AOCI-Deferred Gain/Loss account had a debit balance of $20,000 and the AOCI-PSC account had a debit balance of $200,000. Other data related to the plan for the year 2013 are: Service Cost $800,000 Amortization of prior service cost $10,000 Contribution to the plan $600,000 Benefits paid $500,000 Actual return on plan assets $90,000 Expected return on plan assets 3% Interest (discount or settlement) rate 4%
a.) Prepare a worksheet for Zaras defined benefit pension plan in 2013.
b.) prepare the journal entry that Zara would make on Dec 31, 2013, to record pension expense.
c.) What is the funded status of Zaras pension plan as of Dec 31, 2013? That is, Is it over-or-under funded and by what amount? d.)If Zara had a defined contribution pension plan instead of a defined benefit plan, what journal entry, if any, would it make to record a cash contribution of $600,000 to the plan?