Answer:
A. $250,900
B. Dr Pension expense $250,900
Dr Net gain–pensions $4,700
Cr Pension asset $228,600
Cr Prior service cost $27,000
Dr Pension asset $ 227,000
Cr Cash $ 227,000
Explanation:
A. Calculation to determine the pension expense for the year
Service cost $270,000
Add Interest cost (10% x $1,470,000) $147,000
Less Expected return ($188,400 )
(12%*1,570,000)
Add Amortization of prior service cost $27,000
)
Less Amortization of net gain($4,700)
Pension expense $250,900
Therefore pension expense for the year will be $250,900
B. Preparation of the journal entries to record pension expense and funding for the year)
Dr Pension expense $250,900
Dr Net gain–pensions $4,700
Cr Pension asset ($270,000 + 147,000 – $188,400) $228,600
Cr Prior service cost $27,000
Dr Pension asset $ 227,000
Cr Cash $ 227,000
