Chapter 20 Solutions

E20-7
Rydell Corp Memo Record

Items
Annual
Pension
Expense

Cash
OCI—Prior
Service
Cost
Pension
Asset/Liability
Projected
Benefit
Obligation

Plan
Assets
Balance, Jan. 1, 2012

13,800 cr
560,000 cr
546,200 dr
Prior service cost

120,000 dr

120,000 cr

New Balance, January 1, 2012

680,000 cr
546,200 dr
Service cost

58,000 dr

58,000 cr

Interest Cost
$680,000 x 9% = $61,200

61,200 dr

61,200 cr

Actual return

52,280 cr

52,280 dr
Unexpected gain/ loss

Amortization of PSC

17,000 dr.

17,000 cr

Contributions

65,000 cr

65,000 dr
Benefits

40,000 dr

40,000 cr
Journal entry for 2012

83,920 dr

65,000 cr

103,000 dr

121,920 cr

Accumulated OCI, Jan. 1, 2012

-0-

Balance, Dec. 31, 2012

103,000 dr
135,720 cr
759,200 cr
623,480 dr
E20-7 Continued

Pension Expense 83,920
OCI (PSC) 103,000 Cash 65,000 Pension Asset/Liability 121,920
E20-10
Webb Corp. Memo Record

Items
Annual
Pension
Expense

Cash
OCI—Prior
Service
Cost

OCI---
Gain/Loss

Pension
Asset/Liability
Projected
Benefit
Obligation

Plan
Assets
Balance, Jan. 1, 2012

120,000 cr

600,000 cr

480,000 dr
Service cost

90,000 dr

90,000 cr

Interest Cost
$600,000 x 9% = $54,000

54,000 dr

54,000 cr

Actual return

55,000 cr

55,000 dr
Unexpected gain
$55,000 - $52,000 = $3,000

3,000 dr

3,000 cr

Amortization of PSC

19,000 dr

19,000 cr

Liability increase

76,000 dr

76,000 cr

Amortization of gain/loss

Contributions

99,000 cr

99,000 dr
Benefits

85,000 dr

85,000 cr
Journal entry for 2012

111,000 dr
99,000 cr

19,000 cr
73,000 dr
66,000 cr

Accumulated OCI, Jan. 1, 2012

100,000 dr
-0-

Balance, Dec. 31, 2012

81,000 dr
73,000 dr
186,000 cr
735,000 cr
549,000 dr
E20-10 Continued

Pension Expense 111,000
OCI (G/L) 73,000 OCI (PSC) 19,000 Cash 99,000 Pension