Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the
Question:
Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2025 and 2026.
Instructions
a. Prepare a pension worksheet presenting both years 2025 and 2026 and accompanying computations and amortization of the loss (2026) using the corridor approach.
b. Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.
c. For 2026, indicate the pension amounts reported in the financial statements.
Projected benefit obligation, January 1 Plan assets (fair value and market-related value), January 1 Pension asset/liability, January 1 Prior service cost, January 1 Service cost Settlement rate Expected rate of return Actual return on plan assets Amortization of prior service cost Annual contributions Benefits paid retirees Increase in projected benefit obligation due to changes in actuarial assumptions Accumulated benefit obligation at December 31 Average service life of all employees Vested benefit obligation at December 31 2025 $600,000 410,000 190,000 Cr. 160,000 40,000 10% 10% 36,000 70,000 97,000 31,500 87,000 721,800 2026 $ 59,000 10% 10% 61,000 50,000 81,000 54,000 789,000 20 years 464,000
Step by Step Answer:
a Items Balance Jan 1 2025 Service cost Interest costa Actual return Unexpected lossb Amortization of PSC Contributions Benefits Increase in PBO Journ...View the full answer
Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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