The following information pertains to Company A's Year 5 defined benefit pension plan: January 1, Year 5, fair value of plan assets $100,000 January 1, Year 5, projected benefit obligation (PBO) 200,000 Contribution to the plan (made on December 31, Year 5) 10,000 Benefits paid to employees (made on December 31, Year 5) 15,000 December 31, Year 5, fair value of plan assets 106,000 Discount Rate 5% Expected ling-term rate of return on plan assets 8% Service cost recognized in Year 5 40,000 Prior service cost recoginized in Year 5 70,000
Additional Information - On December 31, Year 5, company amended its defined benefits plan, resulting in an increase of $70,000 in the PBO. - Neither net gain, or loss, in relation to the company's defined benefit plan nor prior service cost were recognized in prior years. - The company applies the corridor approach to account for its net gains or losses in relation to the defined benefit plan. - Assume that the market-related value of thr plan assets is equal to the fair value of plan assets. - Average remaining service period of active employees is 10 years.
Required: Compute pension expense, plan assets at the end of Year5, PBO at the end of Year 5 and prepare all journal entries. Show computations.