Prepare the journal entries to record the pension expense and the company’s funding of the pension…

(Pension Expense, Journal Entries for 2 Years) Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2012 and 2013.

2012

2013

Plan assets (fair value), December 31

$699,000

$849,000

Projected benefit obligation, January 1

700,000

800,000

Pension asset/liability, January 1

140,000 Cr.

?

Prior service cost, January 1

250,000

240,000

Service cost

60,000

90,000

Actual and expected return on plan assets

24,000

30,000

Amortization of prior service cost

10,000

12,000

Contributions (funding)

115,000

120,000

Accumulated benefit obligation, December 31

500,000

550,000

Interest/settlement rate

9%

9%

Instructions

(a) Compute pension expense for 2012 and 2013.

(b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.

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