Eckert, Inc. on January 1, 2008 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 100 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 100 employees who are expected to receive benefits under the plan is 1,200.An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2008 was $5,040,000. On December 31, 2008 the following information was provided concerning the pension plan's operations for its first year.

Employer's contribution at end of year ..... $1,600,000

Service cost ............... 600,000

Accumulated benefit obligation .......5,090,000

Projected benefit obligation ..........6,000,000

Plan assets (at fair value) ..........1,600,000

Market-related asset value ..........1,600,000

Expected return on plan assets ......... 9%

Settlement rate .............. 8%

Instructions

a. Compute the pension expense recognized in 2008. Assume the prior service cost is amortized over the average remaining service life of the employees.

b. Prepare the journal entries to reflect accounting for the company's pension plan for the year ended December 31, 2008.

c. Indicate the amounts that are reported on the income statement and the balance sheet for 2008.