Complete the following exercise. Submit journal entries in an Excel file and written segments in an MS Word document. Label each question clearly.
Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2012, the following balances relate to this plan.
|Projected benefit obligation||625,000|
|Accumulated OCI (PSC)||100,000 Dr.|
As a result of the operation of the plan during 2012, the following additional data are provided by the actuary.
|Service cost for 2012||$90,000|
|Actual return on plan assets in 2012||57,000|
|Amortization of prior service cost||19,000|
|Expected return on plan assets||52,000|
|Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions||76,000|
|Contributions in 2012||99,000|
|Benefits paid retirees in 2012||85,000|
attched file isthe spreadsheets you will need for this exercise.
- Use the spreadsheet Pensions to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.
- Compute the same items as in (1), assuming that the settlement rate is now 7% and the expected rate of return is 10%.
- Prepare the journal entry using the spreadsheet Journal Entries to record pension expense in 2012.
- Indicate the reporting of the 2012 pension amounts in the income statement and balance sheet using the spreadsheet Pensions.