The following data relate to a pension plan for Cobain, Inc.

            January 1, 2020 General Ledger balances:
                        Projected Benefit Obligation                                       $90,000 Cr.
                        Plan Assets                                                                  $90,000 Dr.
                        Accumulated OCI—Pension Gain/Loss                     $15,000 Cr.

Accumulated OCI—Prior Service Cost                       $24,000 Dr.
                     Transactions during 2020:
                        Service cost calculated by actuary                                $21,000
                        Contributions into plan by employer                             $27,000
                        Prior service cost amortization                                     $ 3,000
                        Expected return on plan assets                                    $ 6,000
                        Actual return on plan assets                                         $ 9,000
The actuary informs the company that an 8% discount rate is appropriate for the company this year. The company’s policy is to amortize any Accumulated OCI on pension gains or losses over 15 years on a straight-line basis.
Required: Note: You MIGHT want to do part d) first, as it may help you with parts a, b, and c.
a.    Prepare in proper form all general journal entries related to the defined pension plan for 2020 Round your answers to the nearest whole dollar. SHOW all calculations AS PART OF explanations. So each calculation must be shown below the entries, not just entered into cells as formulas.
b. Assuming pension expenses are not capitalized as part of inventory or other assets, indicate the effect on the income statement for the year ended December 31, 2020. Round your answers to the nearest whole dollar.
c.    Show the changes in each balance sheet account between January 1 and December 31, 2020 and make it clear what amounts and line items will be reported on the company’s December 31, 2020 balance sheet.
d. Create a worksheet to summarize the pension data at the end of 2020. Round your answers to the nearest whole dollar.
e.   If instead of using straight-line amortization over 15 years, the company amortized the appropriate amount of AOCI-Pension Gain or Loss using the corridor approach with average remaining service lives of employees of 10 years, prepare the calculation in a clear and complete form.

Answer rating: 100% (QA)

Quiz a The journal entries are as follows Service cost calculated by actuary 21000 Contributions into plan by employer 27000 Prior service cost amorti... View the full answer