(2 Year Worksheet) On January 1, 2012, Harrington Company has the following defined benefit pension plan balances.
|
Projected benefit 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 prior service costs of $500,000 are created. Other data related to the pension plan are as follows.
|
2012 |
2013 |
|
|
Service cost |
$150,000 |
$180,000 |
|
Prior service cost 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.
(b) For 2013, prepare the journal entry to record pension related amounts.