Ex. 20-126—Pension plan calculations and journal entry.

On January 1, 2008, Stine Co. had the following balances:24,600**-0-

Projected benefit obligation$7,200,000

Fair value of plan assets

Other data related to the pension plan for 2008:7,200,000

Service cost315,000

Unrecognized prior service cost-0-

Contributions to the plan459,000

Benefits paid450,000

Actual return on plan assets432,000

Settlement rate9%

Expected rate of return6%

 

Instructions

(a)Determine the projected benefit obligation at December 31, 2008. There are no net gains or losses.

(b)Determine the fair value of plan assets at December 31, 2008.

(c)Calculate pension expense for 2008.

(d)Prepare the journal entry to record pension expense and the contributions for 2008.

 

 

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