E20-7 (Basic Pension Worksheet) The following defined pension data of Rydell Corp. apply to the year 2014.

Projected benefit obligation, 1/1/14 (before amendment)

$560,000

Plan assets, 1/1/14

546,200

Pension liability

13,800

On January 1, 2014, Rydell Corp., through plan amendment, grants prior service benefits having a present value of

120,000

Settlement rate

9%

Service cost

58,000

Contributions (funding)

65,000

Actual (expected) return on plan assets

52,280

Benefits paid to retirees

40,000

Prior service cost amortization for 2014 17,000

Instruction:

For 2014, Prepare a pension worksheet for Rydell Corp, that shows the jounal entry for pension expense and the year end balance in the related pension accounts.

RYDELL CORP.

Pension Worksheet2014

General Journal Entries

Memo Record

Items

Annual Pension Expense

Cash

OCI - Prior Service Cost

Pension Asset/ Liability

Projected Benefit Obligation

Plan Assets

Balance, December 31, 2013

(a) Prior service cost

Balance, January 1, 2014

(b) Service cost

(c) Interest cost

(d) Actual return

(e) Amortization of PSC

(f) Contributions

(g) Benefits

Journal entry for 2014

Accumulated OCI, December 31, 2013

Balance, December 31, 2014

Interest cost = $560,000 + $120,000 = $680,000 Settlement rate of 9% = $61,200.
Note: We show actual return on the worksheet to ensure that plan assets are properly reported. If expected and actual return differ, then an additional adjustment is made to compute the proper amount of pension expense.