Hobbs Co. has the following defined benefit pension plan balances on January 1, 2025.

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2026, the company amends its pension agreement so that prior service costs of $600,000 are created. Other data related to the pension plan are as follows.

Instructions

a. Prepare a pension worksheet for the pension plan in 2025.

b. Prepare any journal entries related to the pension plan that would be needed at December 31, 2025.

c. Prepare a pension worksheet for 2026 and any journal entries related to the pension plan as of December 31, 2026.

d. Indicate the pension-related amounts reported in the 2026 financial statements.

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Projected benefit obligation Fair value of plan assets $4,600,000 4,600,000