Answer these question since you have the solution

1- How did he find 35,000 for actual earnings on plan assets?

2- How did he find 40,000 for interest on liability ?

3- How did he find (40,000) for estimated earnings on plant assets?

4- Make a worksheet for the problem.

Problem #2

Presented below is information related to Major Department Stores, Inc. pension plan for 2016.

Accumulated benefit obligation (at year-end) $650,000

Service cost 520,000

Funding contribution for 2016 600,000

Settlement rate and estimated return on plan assets 8%

Actual return on plan assets 7%

Amortization of PSC (due to benefit increase) 100,000

Amortization of net gains 48,000

Projected benefit obligation (at beginning of period) 500,000

Fair market value of plan assets (at beginning of period) 500,000

Payments made to retirees 250,000

Instructions

(a) Compute the amount of pension expense to be reported for 2016. (Show computations.)

(b) Determine the plan assets as of 12/31/2016.

(c) Determine the projected benefit obligation as of 12/31/2016.

Pension Expense
Service Cost		520,000
Interest on Liability		40,000
Estimated Earnings on Plan Assets		(40,000)
Amort of PSC		100,000
Amort of G/L		(48,000)
Total Expense		572,000
PBO Reconciliation
Beginning PBO		(500,000)
Service Cost		(520,000)
Interest on Liability		(40,000)
Payments to Retirees		250,000
Ending PBO		(810,000)
Plan Assets Reconciliation
Beginning Plan Assets		500,000
Actual Earnings on Plan Assets		35,000
Contributions		600,000
Payments to Retirees		(250,000)
Ending Plan Assets		885,000