QUESTION 1:
Angel Investigations Inc. adopts acceptable accounting standards (FAS 158) for its defined benefit plan on 1/1/10. The initial
balances in plan assets and projected benefit obligation, as well as other data relating to the subsequent 2 years of the plan
operations are as follows:
Plan Assets (beginning balance 1/1/10)
$ 100,000
PBO (beginning balance 1/1/10)
$ 75,000
Annual Service Costs
2010
2011
Settlement Rate
$ 20,000
$ 25,000
Expected Rate of Return
10%
10%
Actual Return on Plan Assets
10%
10%
Annual Funding Contribution
$ 18,000
$ 30,000
Benefits Paid
$ 17,000
$ 50,000
PBO End Balance at 12/31/10 (due to change in actuarial assumptions)
$ 15,000
$ 18,000
Amort period for Change in Actuarial Assumption and corridor smoothing (in years)
$ 140,000
10
PSC (plan Amended 1/1/11)
$ 150,000
Amount of PSC amortized during 2011
$ 20,000
1) Prepare a pension worksheet showing all pension activities and balances for 2010 and 2011. Provide all journal entries
for the pension worksheet.
2) Prepare the formal journal entries (from the worksheet) to reflect all pension plan transactions and events on the
company's financial statements for 2010 and 2011.
