Swan Company has provided you with the following data pertaining to its pension plan for the year ended December 31, 2018: The 2018 service cost was $175,500.
The projected benefit obligation as of January 1, 2018 was $1,950,000.
Plan assets as of January 1, 2018 totaled $2,020,000.
The actual return on plan assets during 2018 was 10%.
Amortization of prior service costs during 2018 was $9,750.
The expected return on plan assets was 8%.
The pension plan funding during 2018 totaled $170,000.
The discount rate was 8%.
Required:Prepare the journal entry to record pension expense for the year ended December 31,2018.
What will be an ideal response?
| Pension expense | 179,650* | ||
| Cash | 170,000 | ||
| Pension liability | 9,650 | ||
| *Pension expense: | ||||
| Service cost | $ | 175,500 | ||
| + Interest cost | 156,000 | (Beginning PBO $1,950,000 × 8%) | ||
| + Prior service cost amortization | 9,750 | |||
| ? Expected return on plan assets | (161,600 | ) | (Beginning plan assets $2,020,000 × 8%) | |
| Pension expense | $ | 179,650 | ||
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