Carolina Consulting Company has a defined benefit pension plan. The following pe

Question

Carolina Consulting Company has a defined benefit pension plan. The following pension-related data were available for the current calendar year:

Required:
1. Calculate the 2018 pension expense.
2. Prepare the 2018 journal entries to record pension expense and funding.
3. Prepare any journal entries to record any 2018 gains or losses.

PBO: Balance, Jan. 1 $ 231,000 Service cost 32,000 Interest cost (5% discount rate) 11,550 Gain from changes in actuarial assumptions in 2018 (4,100 ) Benefits paid to retirees (11,000 ) Balance, Dec. 31 $ 259,450

Explanation / Answer

Calculation Of Pension Expenses

Service cost 32000

interest Cost 11550

expected return on plan assets 21600

loss On Expected return (1600)

Prior service cost 5350

total Expenses paid 68900

2.

Pension Expense A/c dr 68900

To pension Liability 63565

To Prior service cost 5335

3.

Actual Retur 20000

Loss 1600

To Expected Return 21600

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