On December 31, 2010, the Palmer Company determined that the 2010 service cost on its defined benefit pension plan was $120,000. At the beginning of 2010, Palmer Company had pension plan assets of $520,000 and a projected benefit obligation of $600,000. Its discount rate (and expected long-term rate of return on plan assets) for 2010 was 10%. There are no other components of Palmer Company’s pension expense; the company had an accrued/prepaid pension cost liability at the end of 2009.
1. Compute the amount of Palmer Company’s pension expense for 2010.
2. Prepare the journal entry to record Palmer’s 2010 pension expense if it funds the pension plan in the amount of: