Option #1: Pension

Anonymous
timer Asked: Oct 21st, 2018
account_balance_wallet $15

Question Description

Option #1: Pension

Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and write an analysis directed toward the team at Melanie Vail Corp. describing what the numbers mean and how they relate to the business. Submit journal entries in an Excel file and written segments in an MS Word document. For written answers, please make sure your responses are well-written, formatted per CSU-Global Guide to Writing and APA and have proper citations, if applicable.

Melanie Vail Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan.

Plan assets

$480,000

Projected benefit obligation

625,000

Accumulated OCI (PSC)

100,000 Dr.

Accumulated OCI (Gain/Loss)

85,000 Cr.

As a result of the operation of the plan during 2017, the following additional data are provided by the actuary:

Service cost for 2017

$90,000

Settlement rate

9%

Actual return on plan assets in 2017

57,000

Expected return on plan assets

10%

Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions

76,000

Contributions in 2017

99,000

Benefits paid retirees in 2017

85,000

Avg. remaining service life (all employees)

12 years

Click the link below to download an Excel workbook containing the spreadsheets you will need for this exercise.

  1. Use the spreadsheet Pensions to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.
  2. Prepare the journal entry using the spreadsheet Journal Entries to record pension expense in 2017.
  3. Indicate the reporting of the 2017 pension amounts in the income statement and balance sheet using the spreadsheet Pensions.
  4. What is the amount of deferred pension gain or loss that the company will carry forward to 2018?
  5. Compute the same items as in (#1), assuming that the expected rate of return is 14% and the Accumulated OCI (Gain/Loss) is a Debit balance at January 1, 2017.

Unformatted Attachment Preview

General Journal Entries Items Balance, Jan. 1, 2015 Service cost Interest cost Actual Return Expected Return Amortization of PSC Contributions Benefits Liability increase Journal entry for 2015 Accumulated OCI, Dec. 31, 2014 Balance, Dec. 31, 2015 Annual Pension Expense Cash OCI—Prior Service Cost OCI— Gain/Loss Pension Asset/Liability Memo Record Projected Benefit Obligation Plan assets Prepare the journal entries to record the following. Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has been made. Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has been made. Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has been made. Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has been made. Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has been made. Date Account Title Account Title Amount Amount Provide a one line explanation for the reason why the journal entry has been made. ...
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Tutor Answer

TeacherSethGreg
School: UIUC

Attached.

Running Head: PENSIONS AND POSTRETIREMENT BENEFITS

Title
Name
Institution affiliation

1

2

PENSIONS AND POSTRETIREMENT BENEFITS
Pensions and Postretirement Benefits
Retirement pension plan is widely accepted in the United States as compared to other countries.
Melanie Vail Corp. is a company that sponsors the pension plan for its employees. The Pension

plan sponsored by Melanie Vail Corp has its details presented for the year beginning January 1st
2017. The operation of the company resulted in some extra data that help in calculation of the
year end balances. For this pension plan, the money contributed by the employees are invested
and the returns of the investment are used to pay the employees after retirement. The total pant
asset on the start of the year was $480,000 and at the e...

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Anonymous
Good stuff. Would use again.

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