(Pension Expense, Journal Entries, Statement Presentation) Ferreri Company received the following 1 answer below »

 
   

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(Pension Expense, Journal Entries, Statement Presentation) Ferreri Company received the

following selected information f r om its pension plan t r ustee concerning the operation of the company’s

defined benefit pension plan for the year ended December 31, 2014.

Projected benefit obligation January 1,

2014

December 31,

2014

$1,500,000

$1,527,000

Market-related and fair value of plan assets

800,000

1,130,000

Accumulated benefit obligation

1,600,000

1,720,000

Accumulated OCI (G/L)—Net gain

–0–

(200,000)

The service cost component of pension expense for employee services rendered in the current year amounted to $77,000 and the amortization of prior service cost was $120,000. The company’s actual fund- ing (contributions) of the plan in 2014 amounted to $250,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other compre- hensive income (PSC) had a balance of $1,200,000 on January 1, 2014. Assume no benefits paid in 2014.

Instructions

(a) Determine the amounts of the components of pension expense that should be recognized by the company in 2014.

(b) Prepare the journal entry to record pension expense and the employer ’s contribution to the pension plan in 2014.

(c) Indicate the pension- r elated amounts that would be r eported on the income statement and the balance sheet for Ferreri Company for the year 2014.