Western Zoo Corporation sponsors a defined-benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2014 in which no benefits were paid.
- 1.The actuarial present value of future benefits earned by employees for services rendered in 2014 amounted to $186,000.
- 2.The company’s funding policy requires a contribution to the pension trustee amounting to $95,000 for 2014.
- 3.As of January 1, 2014, the company had a projected benefit obligation of $2,400,000, an accumulated benefit obligation of $2,000,000, and accumulated OCI (PSC) of $900,000. The fair value of pension plan assets amounted to $1,500,000 at the beginning of the year. The market-related asset value was equal to $1,500,000. The actual and expected return on plan assets was $90,000. The settlement rate was 8%. No gains or losses occurred in 2014 and $50,000 of benefits was paid.
4.Amortization of prior service cost was $45,000 in 2014. Amortization of net gain or loss was not required in 2014.
(a)Determine the amounts of the components of pension expense that should be recognized by the company in 2014.
- (b)Prepare the journal entry or entries to record pension expense and the employer’s contribution to the pension trustee in 2014.