Verna Company has had a defined benefit pension plan for several years. At the end of 2016, Verna accumulated the following information:
(1) Service cost for 2016, $127,000;
(2) Projected benefit obligation, 1/1/2016, $634,000;
(3) Discount rate, 9%;
(4) Plan assets, 1/1/2016,$589,000;
(5) Expected long-term rate of return on plan assets, 9%.
There are no other components of Verna's pension expense. Verna had an accrued/prepaid pension cost liability at the end of 2015. Verna contributed $128,000 to the pension plan at the end of 2016.
Required:
Compute the amount of Verna's pension expense for 2016 and prepare the related journal entry.