Hobbs Co. has the following defined benefit pension plan balances on January 1, 2014. Projected benefi t obligation $4,600,000 Fair value of plan asse
Hobbs Co. has the following defined benefit pension plan balances on January 1, 2014. Projected benefi t obligation $4,600,000 Fair value of plan assets 4,600,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends its agreement so that prior service costs of $600,000 are created. Other data related to the pension plan are:
\r\n2014 2015 Service cost $150,000 $170,000
\r\nPrior service cost amortization –0– 90,000
\r\nContributions (funding) to the plan 200,000 184,658
\r\nBenefi ts paid 220,000 280,000
\r\nActual return on plan assets 252,000 350,000
\r\nExpected rate of return on assets 6% 8%
\r\nInstructions
\r\n(a) Prepare a pension worksheet for the pension plan in 2014.
\r\n(b) Prepare any journal entries related to the pension plan that would be needed at December 31, 2014.
\r\n(c) Prepare a pension worksheet for 2015 and any journal entries related to the pension plan as of
\r\nDecember 31, 2015.
\r\n(d) Indicate the pension-related amounts reported in the 2015 financial statements.