Rector Corporation, a publicly traded company, has a defined benefit pension plan. Information regarding the plan...

Transcribed Image Text:

Rector Corporation, a publicly traded company, has a defined benefit pension plan. Information regarding the plan for 2020 is as follows: Defined benefit obligation, December 31, 2019 $ 495,000 Current service costs for 2020 63,000 Past service costs from an amendment dated December 31, 2020, liability is increased as benefits were increased. 168,000 Accumulated OCI at the beginning of 2020 as a result of losses 45,800 Actuarial revaluation dated December 31, 2020; a decrease to the liability because of revised mortality assumptions 31,000 Benefits paid to retirees during 2020 43,200 Fair value of plan assets, December 31, 2019 297,000 Funding contributions made February 1, 2020 79,200 Actual return on plan assets for 2020 23,800 The yield on long-term debt was 5% for the year. Benefits to retirees are paid evenly throughout the year. Required: 1. Calculate the interest expense on the defined benefit obligation and the interest income on the plan asset. (3 marks) 2. Prepare a pension spreadsheet that summarizes all the relevant pension data for 2020. (14 marks) 3. Prepare all necessary pension related journal entries for the year ending December 31, 2020. (5 marks) Rector Corporation, a publicly traded company, has a defined benefit pension plan. Information regarding the plan for 2020 is as follows: Defined benefit obligation, December 31, 2019 $ 495,000 Current service costs for 2020 63,000 Past service costs from an amendment dated December 31, 2020, liability is increased as benefits were increased. 168,000 Accumulated OCI at the beginning of 2020 as a result of losses 45,800 Actuarial revaluation dated December 31, 2020; a decrease to the liability because of revised mortality assumptions 31,000 Benefits paid to retirees during 2020 43,200 Fair value of plan assets, December 31, 2019 297,000 Funding contributions made February 1, 2020 79,200 Actual return on plan assets for 2020 23,800 The yield on long-term debt was 5% for the year. Benefits to retirees are paid evenly throughout the year. Required: 1. Calculate the interest expense on the defined benefit obligation and the interest income on the plan asset. (3 marks) 2. Prepare a pension spreadsheet that summarizes all the relevant pension data for 2020. (14 marks) 3. Prepare all necessary pension related journal entries for the year ending December 31, 2020. (5 marks)

Answer rating: 100% (QA)

Answer 1 Calculation of Interest Expense Particular D... View the full answer