Pension data for barry financial services inc. include the following: ($ in 000s) discount rate, 7% expected return on plan assets, 10% actual return on plan assets, 9% service cost, 2018 $ 310 january 1, 2018: projected benefit obligation 2,300 accumulated benefit obligation 2,000 plan assets (fair value) 2,400 prior service cost–aoci (2018 amortization, $25) 325 net gain–aoci (2018 amortization, $6) 330 there were no changes in actuarial assumptions. december 31, 2018: cash contributions to pension fund, december 31, 2018 245 benefit payments to retirees, december 31, 2018 270 required: 1. determine pension expense for 2018. 2. prepare the journal entries to record pension expense, gains and losses (if any), funding, and retiree benefits for 2018.

$250

Explanation:

(i) Pension expense for 2018:

= Service Cost + Interest Cost - Expected rate of return + Amortization of prior service cost - Amortization of prior net gain

= $310 +  (2,300 × 7%) - ($216 actual + $24 loss) + $25 - $6

= $310 +  $161 - $240 + $25 - $6

= $250

(ii) (a)

Pension expense A/c                                   Dr. $250

Plan Assets A/c                                             Dr. $240

Amortization of net gain – OCI A/c             Dr. $6

To Amortization of prior service-cost – OCI                $25

To PBO                                                                            $471

(To record pension expense)

(b) Loss – OCI A/c         Dr. $24

To plan assets                             $24

(To record the loss on assets)

(c) Plan assets A/c      Dr.  $245

To cash                                        $245

(To record funding amount)

(d) PBO A/c      Dr. $270

To plan assets                $270

(To record retiree benefits)

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