On January 1, 2018, McGee Co. had the following balances: Projected benefit obligation $7,310,000 Fair value of plan assets 7,310,000 Other data related to the pension plan for 2018: Service cost 306,000 Contributions to the plan 450,000 Benefits paid 441,000 Actual return on plan assets 435,000 Settlement rate 9% Expected rate of return 6% Determine the projected benefit obligation at December 31, 2018. There are no net gains or losses. Projected benefit obligation $ Determine the fair value of plan assets at December 31, 2018. Fair value of plan assets $ Calculate pension expense for 2018. Pension expense $ Prepare the journal entry to record pension expense and the contributions for 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

Question

Ruben Ross

Business

30 September, 21:28

On January 1, 2018, McGee Co. had the following balances: Projected benefit obligation $7,310,000 Fair value of plan assets 7,310,000 Other data related to the pension plan for 2018: Service cost 306,000 Contributions to the plan 450,000 Benefits paid 441,000 Actual return on plan assets 435,000 Settlement rate 9% Expected rate of return 6% Determine the projected benefit obligation at December 31, 2018. There are no net gains or losses. Projected benefit obligation $ Determine the fair value of plan assets at December 31, 2018. Fair value of plan assets $ Calculate pension expense for 2018. Pension expense $ Prepare the journal entry to record pension expense and the contributions for 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

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Answers (1)

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Aden Mercer · Answer 1

A.$7,831,000

B.$7,754,000

C.$527,900

Explanation:

(a) Projected benefit obligation, January 1 $7,310,000

Service cost 306,000

Interest cost (9% * $7,310,000) 656,900

Benefits paid (441,000)

Projected benefit obligation, December 31

$7,831,000

(b) Fair value of plan assets, January 1 $7,310,000

Actual return 435,000

Contributions 450,000

Benefits paid (441,000)

Fair value of plan assets, December 31 $7,754,000

(c) Service cost $306,000

Interest cost (9% * $7,310,000) 656,900

Actual (and expected) return on plan assets (435,000)

Pension expense$527,900

(d) Dr Pension expenses $527,900

Cr Pension asset/liability and Cash $527,000