AC 302 Chapter 20 Questions AND Problems
Exercise 20 Question 1
Name: Date:
Instructor: Course:
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield
Primer on Using Excel in Accounting by Rex A Schildhouse
E20-1 (Pension Expense, Journal Entries) The following information is available for the pension plan of Radcliffe Company for the year 2012.
Actual and expected rate of return on plan assets $15,000
Benefits paid to retirees 40,000
Contributions (funding) 90,000
Interest/discount rate 10%
Prior service cost amortization 8,000
Projected benefit obligation, January 1, 2012 500,000
Service cost 60,000
Instructions:
(a) Compute pension expense for the year 2012.
Computation of pension expense:
Text Title Amount
Text Title Amount
Text Title Amount
Text Title Amount
Text Title Formula
"(b) Prepare the journal entry to record pension expense and the employer's contribution to the pension
plan in 2012."
Account Title Amount
Account Title Amount
Account Title Amount
Account Title Amount
Exercise 20-7
Name: Date:
Instructor: Course:
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield
Primer on Using Excel in Accounting by Rex A Schildhouse
E20-7 (Basic Pension Worksheet) The following defined pension data of Rydell Corp. apply to the year 2012.
Projected benefit obligation, 1/1/12 (before amendment) $560,000
Plan assets, 1/1/12 546,200
Pension liability 13,800
"On January 1, 2012, Rydell Corp., through plan amendment,
grants prior service benefits having a present value of" 120,000
Settlement rate 9%
Service cost 58,000
Contributions (funding) 65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2012 17,000
Instructions:
For 2012, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
RYDELL CORP.
Pension Worksheetâ€â€2012
General Journal Entries Memo Record
Items "Annual
Pension
Expense" Cash OCI - Prior Service Cost "Pension
Asset/
Liability" "Projected
Benefit
Obligation" "Plan
Assets"
Balance, January 1, 2011 Formula Formula Formula
(a) Prior service cost Formula Formula
New balance, January 1, 2012 Formula Formula
(b) Service cost Formula Formula
(c) Interest cost Formula Formula
(d) Actual return Formula Formula
(e) Amortization of PSC Formula Formula
(f) Contributions Formula Formula
(g) Benefits Formula Formula
Journal entry, December 31 Formula Formula Formula Formula
Accumulated OCI, December 31, 2011 Amount
Balance, December 31, 2012 Formula Formula Formula Formula
Problem 20-1
Name: Date:
Instructor: Course:
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield
Primer on Using Excel in Accounting by Rex A Schildhouse
P20-1 (2-Year Worksheet) On January 1, 2012, Harrington Company has the following defined benefit pension plan balances.
Projected benefits obligation $4,500,000
Fair value of plan assets 4,200,000
The interest (settlement) rate applicable to the plan is 10% On January 1, 2013, the company amends its pension
agreement so that service costs of $500,000 are created. Other data related to the pension plan are as follows:
2012 2013
Service costs $150,000 $180,000
Prior service costs amortization 0 90,000
Contributions (funding) to the plan 240,000 285,000
Benefits paid 200,000 280,000
Actual return on plan assets 252,000 260,000
Expected rate of return on assets 6% 8%
Instructions:
(a) Prepare a pension worksheet for the pension plan for 2012 and 2013.
HARRINGTON COMPANY
Pension Worksheetâ€â€2012 and 2013
General Journal Entries Memo Record
Items "Annual
Pension
Expense" Cash OCI - Prior Service Cost OCI - Gain/Loss "Pension
Asset/
Liability" "Projected
Benefit
Obligation" "Plan
Assets"
Balance, Jan. 1, 2012 Amount Amount Amount
(a) Service cost Amount Amount
(b) Interest cost Amount Amount
(c) Actual return Amount Amount
(d) Contributions Amount Amount
(e) Benefits Amount Amount
Journal entry, 12/31/12 Formula Formula Formula Formula Formula Formula Formula
Accum OCI, 12/31/11
Balance, Dec. 31, 2012 Formula Formula Formula
(f) Additional PSC Amount Amount
January 1, 2013 Formula
(g) Service cost Amount Amount
(h) Interest cost Formula Formula
(i) Actual return Amount Amount
(j) Unexpected loss Formula Amount
(k) Amortization of PSC Amount Amount
(l) Contributions Amount Amount
(m) Benefits Amount Amount
Journal entry, 12/31/13 Formula Formula Formula Formula Formula
Accum OCI, 12/31/12 Amount Amount
Balance, Dec. 31, 2013 Formula Formula Formula Formula Formula
Area for calculations as desired
Area for calculations as desired
Area for calculations as desired
(b) For 2013, prepare the journal entry to record pension-related amounts.
Account title Amount
Account title Amount
Account title Amount
Account title Amount
Account title Amount
Problem 20-4
Name: Date:
Instructor: Course:
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield
Primer on Using Excel in Accounting by Rex A Schildhouse
P20-4 (Pension Expense, Journal Entries for 2 Years) Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2012 and 2013.
2012 2013
Plan assets (fair value), December 31 $699,000 $849,000
Projected benefit obligation, January 1 700,000 800,000
Pension asset/liability, January 1 (140,000) ?
Prior service cost, January 1 250,000 240,000
Service cost 60,000 90,000
Actual and expected return on plan assets 24,000 30,000
Amortization of prior service cost 10,000 12,000
Contributions (funding) 115,000 120,000
Accumulated benefit obligation, December 31 500,000 550,000
Interest/settlement rate 9% 9%
Instructions:
(a) Compute pension expense for 2012 and 2013.
Computation of pension expense:
2012 2013
Service cost Amount Amount
Interest cost Formula Amount
Expected return on plan assets Amount Amount
Amortization of prior service cost Amount Amount
Pension expense Formula Formula
"(b) Prepare the journal entries to record the pension expense and the company's funding of the
pension plan for both years."
2012
Pension Asset/Liability Amount
Pension Expense Amount
Other Comprehensive Income (PSC) Amount
Other Comprehensive Income (G&L) Amount
Cash Amount
2013
Pension Expense Amount
Cash Amount
Pension Asset/Liability Amount
Other Comprehensive Income (PSC) Amount
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