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Pension worksheet, journal entries for defined benefit pension plan

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(Comprehensive 2-Year Worksheet) Glesen Company sponsors a defined benefit pension plan
for its employees. The following data relate to the operation of the plan for the years 2008 and 2009.

2008 2009
Projected benefit obligation, January 1 $650,000
Plan assets (fair value and market related value), January 1 410,000
Prepaid/accrued pension cost (credit), January 1 80,000
Additional pension liability, January 1 12,300
Intangible asset-deferred pension cost, January 1 12,300
Unrecognized prior service cost, January 1 160,000
Service cost 40,000 $ 59,000
Settlement rate 10% 10%
Expected rate of return 10% 10%
Actual return on plan assets 36,000 61,000
Amortization of prior service cost 70,000 55,000
Annual contributions 72,000 81,000
Benefits paid retirees 31,500 54,000
Increase in projected benefit obligation due to
changes in actuarial assumptions 87,000
Accumulated benefit obligation at December 31 721,800 789,000
Average service life of all employees 20 years
Vested benefit obligation at December 31 464,000


(a) Prepare a pension worksheet presenting both years 2008 and 2009 and accompanying computations
including the computation of the minimum liability (2008 and 2009) and amortization of the
unrecognized loss (2009) using the corridor approach.
(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events
at December 31 of each year.
(c) At December 31, 2009, prepare a schedule reconciling the funded status of the pension plan with
the pension amounts reported in the financial statements.


Solution Summary

The expert prepares a pension plan worksheet and journal entries for defined benefit pension plans.