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Name: Sara Date:
Instructor: Course:

P20-1 (2-Year Worksheet) On January 1, 2014, Harrington Company has the following defined benefit pension plan balanc
Projected benefits obligation $4,500,000
Fair value of plan assets 4,200,000

The interest (settlement) rate applicable to the plan is 10% On January 1, 2015, the company amends its pens
agreement so that service costs of $500,000 are created. Other data related to the pension plan are as follow

2014 2015
Service costs $150,000 $180,000
Prior service costs amortization 0 90,000
Contributions (funding) to the plan 240,000 285,000
Benefits paid 200,000 280,000
Actual return on plan assets 252,000 260,000
Expected rate of return on assets 6% 8%

Instructions:
(a) Prepare a pension worksheet for the pension plan for 2014 and 2015.

HARRINGTON COMPANY
Pension Worksheet—2014 and 2015
General Journal Entries
Annual Pension
OCI - Prior OCI -
Items Pension Cash Asset/
Service Cost Gain/Loss
Expense Liability
Balance, Jan. 1, 2014 300,000
(a) Service cost 150,000
(b) Interest cost 450,000
(c) Actual return 252,000
(d) Contributions 240,000
(e) Benefits
Journal entry, 12/31/14 348,000 240,000 0 0 108,000
Accum OCI, 12/31/13
Balance, Dec. 31, 2014 408,000
(f) Additional PSC 500,000
January 1, 2015
(g) Service cost 180,000
(h) Interest cost 540,000
(i) Actual return 260,000
(j) Unexpected loss (99,360) 99,360
(k) Amortization of PSC 90,000 90,000
(l) Contributions 285,000
(m) Benefits
Journal entry, 12/31/15 450,640 285,000 410,000 99,360 675,000
Accum OCI, 12/31/14 0 0
Balance, Dec. 31, 2015 410,000 99,360 1,083,000

2014 Interest cost = $4,500,000 × 10% settlement rate = $450,000.

2015 Interest cost = $5,400,000 × 10% settlement rate = $540,000.
2015 Unexpected loss = ($4,492,000 × 8% expected return on assets in 2014) - $260,000 actual return on plan assets in 20
$99,360.

(b) For 2015, prepare the journal entry to record pension-related amounts.
Pension Expense 450,640
Other Comprehensive Income (PSC) 410,000
Other Comprehensive Income (G/L) 99,360
Cash 285,000
Pension Asset/Liability 675,000
ed benefit pension plan balances.

, the company amends its pension

o the pension plan are as follows:

Memo Record
Projected
Plan
Benefit
Assets
Obligation
4,500,000 4,200,000
150,000
450,000
252,000
240,000
200,000 200,000
Formula Formula

4,900,000 4,492,000
500,000
5,400,000
180,000
540,000
260,000

285,000
280,000 280,000
 5,840,000 4,757,000

tual return on plan assets in 2015 =