Accounting -Jack Inc. sponsors a defined benefit pension plan for its employees

| January 30, 2017

Question
Jack Inc. sponsors a defined benefit pension plan for its employees. On January 1, 2010, the following balances relate to this plan.

Plant Assets – 5,516,000

Projected benefit obligation – (5,200,000)

Prior service cost (OCI) – 2,540,000

Accumulated OCI (Gain/loss) – (736,000)

As a result of the operation of the plan during 2010, the following additional data are provided by the actuary.

Service cost for 2010 – 653,000

settlement rate – 9%

expected rate of return – 10%

plan asset on Dec. 31, 2010 – 6,320,000

average service life of all covered employees in years – 20

PBO on Dec. 31 2010m based on actuarial predictions 6,135,000

Contributions in 2010 – 912,000

benefits paid retirees in 2010 – 805,000

instructions:

a) using data above, compute pension expense for the year 2010 by preparing a pension worksheet

B) prepare journal entry for pension expense for 2010

c) compute the amount of net gains or losses to be amortized for 2010 and 2011

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