Problem $1$ Defined Benefit Pension Plan

Your work for this problem should be in accordance with ASC $715.$

Loth Stove, Inc. adopted a defined benefit pension plan for its employees on January $1,20$X$3.$ The

following information pertains to the operation of the plan during $20$X$3$ and $20$X$4$:

$1.$ The actuarial present value of future benefits earned by employees for services rendered during

the two years prior to the adoption of the plan was $$675,000$ as of January $1,20$X$3.$ The average

remaining expected service life of the employees is $12$ years.

$2.$ The actuarial present value of future benefits earned by employees for services rendered during

$20$X$3$ was $$334,200$ as of December $31,20$X$3$ and for services rendered during $20$X$4$ was

$$353,700$ as of December $31,20$X$4.$

$3.$ The company made the following cash contributions to the pension plan trustee: $$506,800$ on

April $1,20$X$3,$ $$281,400$ on December $31,20$X$3,$ and $$288,000$ on December $31,20$X$4.$ The

trustee invested the plan assets in mutual funds.

$4.$ The actual and expected annual rate of return on plan assets for $20$X$3$ and $20$X$4$ was $6\%.$ The

discount rate $($interest cost$)$ for both years was $4\%.$ No gains or losses occurred and no benefits

were paid in either year. Employee compensation is expected to increase $3\%$ per year.