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Account Title
Amount
Date
Prepare the journal entries to record the following.
Provide a one line explanation for the reason why the journal entry has been made.
General Journal Entries
Memo Record
Items
Cash
Annual
Pension
Expense
OCI—Prior
Service Cost
OCI—
Gain/Loss
Asset/Liability
Projected
Benefit
Obligation
Plan assets
Service cost
Interest cost
Amortization of PSC
Contributions
Benefits
Liability increase
Actual Return
Expected Return
Balance, Jan. 1, 2014
Journal entry for 2014
Accumulated OCI, Dec. 31, 2013
Balance, Dec. 31, 2013

Assignment 5
Complete the following exercise. Label each question clearly.
Sonta Corp. provides a defined benefit pension plan for its employees. The balances below are on its books as of January 1, 2014.

Account Balance
Plan assets $480,000
Projected benefit obligation (PBO) $625,000
Accumulated OCI (Prior Service Cost) $100,000*

* Prior Service Cost has a debit balance on January 1, 2014.

The actuary has provided the following information:
2014 Service cost $90,000
Amortization of prior service cost $19,000
Settlement rate 9%
Actual return on plan assets in 2014 $57,000
Unexpected loss from change in PBO due to actuarial
predictions’ change $76,000
Contributions in 2014 $99,000
Benefits paid to retirees in 2014 $85,000
Required
1. Use the spreadsheet
Pensions
to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss. Recall that settlement rate is 9%.
2. Compute the same items as in (1), assuming that the settlement rate is now 7% and the expected rate of return is 10%. Hint: Simply change the interest cost to 7%; change actual/expected return to balance of plant asset on January 1, 2014*10%.
3. Prepare the journal entry using the spreadsheet
Journal Entries
to record pension expense in 2014.
Indicate the reporting of the 2014 pension amounts in…