Jennifer Corp.'s defined benefit pension plan had an amendment as of January 1, 2019, that retroactively included benefits of $1,500,000. The remaining service life of the employees impacted by this change is 10 years. Jennifer uses the straight-line method to amortize the prior service cost. As of January 1, 2019, Jennifer had the following information related to its pension plan, including adjustments for the plan amendment: Accrued/prepaid pension cost (credit) $3,790,000 Projected benefit obligation 5,200,000 Accumulated other comprehensive income (debit) 1,500,000 Fair value of plan assets 1,410,000 Interest (discount) rate 10% Expected rate of return on plan assets 12%   The actuary reported service cost of $600,000 in both 2019 and 2020. Annual payments to retirees totaled $90,000. The trustee of the plan assets reported the actual rate of return to be 11% in 2019. Jennifer's annual year-end contribution to the plan equals the current year's service cost less actual return on plan assets plus interest growth of the projected benefit obligation and amortization of prior service costs and/or gains and losses as calculated for pension expense. Required: a. Compute Jennifer's 2019 contribution. b. Compute Jennifer's 2019 pension expense. Enter your answer as positive amount. c. Prepare the journal entry to record the pension expense and pension contribution.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter19: Accounting For Post Retirement Benefits
Section: Chapter Questions
Problem 4E
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Jennifer Corp.'s defined benefit pension plan had an amendment as of January 1, 2019, that retroactively included benefits of $1,500,000. The remaining service life of the employees impacted by this change is 10 years. Jennifer uses the straight-line method to amortize the prior service cost.
As of January 1, 2019, Jennifer had the following information related to its pension plan, including adjustments for the plan amendment:
Accrued/prepaid pension cost (credit) $3,790,000
Projected benefit obligation 5,200,000
Accumulated other comprehensive income (debit) 1,500,000
Fair value of plan assets 1,410,000
Interest (discount) rate 10%
Expected rate of return on plan assets 12%
 
The actuary reported service cost of $600,000 in both 2019 and 2020. Annual payments to retirees totaled $90,000. The trustee of the plan assets reported the actual rate of return to be 11% in 2019.
Jennifer's annual year-end contribution to the plan equals the current year's service cost less actual return on plan assets plus interest growth of the projected benefit obligation and amortization of prior service costs and/or gains and losses as calculated for pension expense.
Required:
a. Compute Jennifer's 2019 contribution.
b. Compute Jennifer's 2019 pension expense. Enter your answer as positive amount.
c. Prepare the journal entry to record the pension expense and pension contribution.
d. Compute the December 31, 2019 balance in Pension Benefit Obligation.
e. Compute the December 31, 2019 balance in Plan Assets.
f. Prepare the adjusting journal entry to record the plan's adjustment to other comprehensive income at December 31, 2019.
g. Is Jennifer's plan overfunded or underfunded, and by how much, as of December 31, 2019?
 
 
 
 
X
Chart of Accounts
 
 
CHART OF ACCOUNTS
Jennifer Corp.
General Ledger
  ASSETS
111 Cash
121 Accounts Receivable
141 Inventory
152 Prepaid Insurance
181 Equipment
198 Accumulated Depreciation
199 Accrued/Prepaid Pension Cost
  LIABILITIES
211 Accounts Payable
231 Salaries Payable
250 Unearned Revenue
251 Accrued/Prepaid Pension Cost
261 Income Taxes Payable
  EQUITY
311 Common Stock
331 Retained Earnings
332 Other Comprehensive Income
  REVENUE
411 Sales Revenue
  EXPENSES
500 Cost of Goods Sold
511 Insurance Expense
512 Utilities Expense
521 Salaries Expense
522 Pension Expense
532 Bad Debt Expense
540 Interest Expense
541 Depreciation Expense
559 Miscellaneous Expense
910 Income Tax Expense
 
 
 
 
X
First Questions
 
 
a. Compute Jennifer's 2019 contribution.
 
 
b. Compute Jennifer's 2019 pension expense. Enter your answer as positive amount.
 
 
 
 
 
X
General Journal
 
 
General Journal Instructions
c. Prepare the journal entry to record the pension expense and pension contribution on December 31.
PAGE 1
 
GENERAL JOURNAL
 
  DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT
1
 
 
 
 
 
2
 
 
 
 
 
3
 
 
 
 
 
 
 
 
f. Prepare the adjusting journal entry to record the plan's adjustment to other comprehensive income at December 31, 2019.
PAGE 1
 
GENERAL JOURNAL
 
  DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT
1
 
 
 
 
 
2
 
 
 
 
 
 
 
 
 
 
 
X
Final Questions
 
 
d. Compute the December 31, 2019 balance in Pension Benefit Obligation.
 
 
e. Compute the December 31, 2019 balance in Plan Assets.
 
 
g. Is Jennifer's plan overfunded or underfunded, and by how much, as of December 31, 2019?
The plan is     by 
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