Presented below is information related to Stage Department Stores, Inc. pension
ID: 2534421 • Letter: P
Question
Presented below is information related to Stage Department Stores, Inc. pension plan for 2018.
Service cost $1,100,000
Funding contribution for 2018 1,060,000
Settlement rate used in actuarial computation 10%
Expected return on plan assets 9%
Amortization of PSC (due to benefit increase) 180,000
Amortization of unrecognized net gains 96,000
Projected benefit obligation (at beginning of period) 1,080,000
Fair value of plan assts (at beginning of period) 720,000
Instructions
Compute the amount of pension expense to be reported for 2018. (Show computations.)
Prepare the journal entry to record pension expense and the employer’s contribution for 2018.
Explanation / Answer
a) Service cost $1,100,000 Interest on projected benefit obligation ($1080,000 × 10%) $108,000 Expected return on plan assets ($720000× 9%) ($64,800) Amortization of PSC $180,000 Amortization of net gains ($96,000) Pension expense—2018 $1,227,200 b) General Journal Debit Credit Pension Expense $1,227,200 Other Comprehensive Income (G/L) $96,000 Cash $1,060,000 Other Comprehensive Income (PSC) $180,000 Pension Asset / Liability $83,200