P20-4 (Pension Expense, Minimum Liability, Journal Entries for 2 Years) Mantle Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2007 and 2008.
Plan assets (fair value), December 31 - 2007: $380,000 2008: $465,000
Projected benefit obligation, January 1 - 2007: $600,000 2008: $700,000
Prepaid/(accrued) pension cost balance, January 1 - 2007: (40,000) 2008: $?
Unrecognized prior service cost, January 1 - 2007: $250,000 2008: $240,000
Service cost - 2007: $60,000 2008: $90,000
Actual and expected return on plan assets – 2007: $24,000 2008: $30,000
Amortization of prior service cost - 2007: $10,000 2008: $12,000
Contributions (funding) - 2007: $110,000 2008: $120,000
Accumulated benefit obligation, December 31 - 2007: $500,000 2008: $550,000
Additional pension liability balance, January 1 - 2007: $50,000 2008: $?
Interest/settlement rate - 2007: 9% 2008: 9%
Instructions
(a) Compute pension expense for 2007 and 2008.
(b) Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years.
(c) Compute the minimum liability for 2007 and 2008.
(d) Prepare the journal entries to record the minimum liability for both years.
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