(Pension Expense, Journal Entries) Latoya Company provides the following selected information related to its defined benefit pension plan for 2012.
|
Pension asset/liability (January 1) |
$ 25,000 Cr. |
|
Accumulated benefit obligation (December 31) |
400,000 |
|
Actual and expected return on plan assets |
10,000 |
|
Contributions (funding) in 2012 |
150,000 |
|
Fair value of plan assets (December 31) |
800,000 |
|
Settlement rate |
10% |
|
Projected benefit obligation (January 1) |
700,000 |
|
Service cost |
80,000 |
Instructions
(a) Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2012. Preparation of a pension worksheet is not required. Benefits paid in 2012 were $35,000.
(b) Indicate the pension related amounts that would be reported in the company’s income statement and balance sheet for 2012.