On January 1, 2020, Harrington Company has the following defined benefit pension plan balances.

Projected benefit obligation.............$4,500,000Fair value of plan assets.....................4,200,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $500,000 are created. Other data related to the pension plan are as follows.

Instructions

a. Prepare a pension worksheet for the pension plan for 2020 and 2021.

b. For 2021, prepare the journal entry to record pension-related amounts.

Transcribed Image Text:

2020 2021 Service cost Prior service cost amortization Contributions (funding) to the plan Benefits paid Actual return on plan assets Expected rate of return on assets $150,000 $180,000 90,000 285,000 280,000 260,000 -0- 240,000 200,000 252,000 8% 6%