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    Pension calculation

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    Presented below is information related to major Department stores, Inc. pension plan for 2008

    Accumulated benefit obligation (at year -end) $600,000
    Service cost 520,000
    Funding contribution for 2008 500,000
    Settlement rate used in actuarial computation 10%
    Expected return on plant assets 9%
    Amortization of PSC (due to benefit increase) 100,000
    Amortization of net gains 48,000
    Projected benefit obligation (at beginning of period) 480,000
    Market-related (and fair) value of plan assets (at the beginning of period)$360,000

    Instructions

    a) Compute the amount of pension expense to be reported for 2008 (show computations)

    b) Prepare the journal entry to record pension expense and the employer's contribution for 2008. Assume no new actuarial gains/losses were experienced and that actual returns on assets equaled expected return.

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    https://brainmass.com/business/journal-entries/pension-calculation-227958

    Solution Preview

    (a)
    The amount of pension expense for 2008 is
    Service cost =$520,000
    Add: Interest on projected benefit obligation ($480,000 × 10%)= 48,000
    Less: ...

    Solution Summary

    The solution explains how to calculate the pension expense and pass the related journal entries

    $2.49

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