On January 1, 2016, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,290,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2016: Employee Expected Years of Future Service A 1 B D F 6. Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik's pension expense, in addition to the amortization of the prior service cost for 2016 and 2017: 2016 2017 Service cost $386,800 $410,683 Interest cost on projected benefit obligation 116,800 174,737 Expected return on plan assets 93,000 Baznik contributed $799,800 and $759,200 to the pension fund at the end of 2016 and 2017, respectively. Required: 1. Next Level Prepare a set of schedules for Baznik i determine (a) the amortization fraction for each year and (b) the amortization of the prior service cost. 2. Next Level Prepare all the journal entries related to Baznik's pension plan for 2016 and 2017.
On January 1, 2016, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,290,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2016: Employee Expected Years of Future Service A 1 B D F 6. Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik's pension expense, in addition to the amortization of the prior service cost for 2016 and 2017: 2016 2017 Service cost $386,800 $410,683 Interest cost on projected benefit obligation 116,800 174,737 Expected return on plan assets 93,000 Baznik contributed $799,800 and $759,200 to the pension fund at the end of 2016 and 2017, respectively. Required: 1. Next Level Prepare a set of schedules for Baznik i determine (a) the amortization fraction for each year and (b) the amortization of the prior service cost. 2. Next Level Prepare all the journal entries related to Baznik's pension plan for 2016 and 2017.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter19: Accounting For Post Retirement Benefits
Section: Chapter Questions
Problem 15E
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Transcribed Image Text:On January 1, 2016, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,290,000 on that date (which it did not fund). Baznik has
six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2016:
Employee
Expected Years of Future Service
A
1
B
4
D
E
F
6
Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik's pension expense, in addition to the amortization of the prior service cost for 2016 and 2017:
2016
2017
Service cost
$386,800
$410,683
Interest cost on projected benefit obligation
116,800
174,737
Expected return on plan assets
93,000
Baznik contributed $799,800 and $759,200 to the pension fund at the end of 2016 and 2017, respectively.
Required:
1. Next Level Prepare a set of schedules for Baznik to determine (a) the amortization fraction for each year and (b) the amortization of the prior
service cost.
2. Next Level Prepare all the journal entries related to Baznik's pension plan for 2016 and 2017.
Transcribed Image Text:Instructions
General Journal
Prepare the entries to record the prior service cost on January 1, 2016, and the pension expense and amortization of prior service cos
How does grading work?
PAGE 2016
PAGE 2017
GENERAL JOURNAL
Score: 126/155
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
Dec. 31, 2016
Pension Expense
826,100.00
1
2
Cash
799.800.00
Accrued/Prepaid Pension Cost
26,300.00
Dec. 31, 2016
Other Comprehensive Income: Prior Service Cost
4
5
Accrued/Prepaid Pension Cost
Dec. 31, 2016 Accrued/Prepaid Pension Cost
Other Comprehensive Income: Prior Service Cost
How does grading work?
PAGE 2016
PAGE 2017
GENERAL JOURNAL
Score: 126/155
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
Dec. 31, 2017
Pension Expense
761,170.00
Cash
759.200.00
Accrued/Prepaid Pension Cost
1,970.00
Dec. 31, 2017 Accrued/Prepaid Pension Cost
Other Comprehensive Income: Prior Service Cost
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