PROBLEM I
DATE-
May 9,201
On January 1, 2011, McGee Co. had the following balances:
Projected benefit obligation
Fair value of plan assets
Other data related to the pension plan for 2011:
contributions to the plan
Benefits paid
$6,400,000
6,000,000
400,000
On 1/1/20011, prior service cost was granted having
350,000
a present value of
150,000
Actual return on plan assets
430,000
Settlement rate
9%
Expected rate of return
7%
Amortized Prior Service cost
40,000
Amortization of net gain
50,000
Service cost
250,000
Required:
(a) Calculate pension expense for 2011.
(b) Prepare the journal entry to record pension expense and the contributions for 2011.
(c) Determine the amount of pension asset/ liability that should be reported on the balance sheet
December 31, 2011. (Show computation!!)
(d) Determine the balance of the Projected Benefit Obligation (PBO) at December 31, 2011.