On January 1, 2013, Laura's Living Company has the following defined benefit pension plan balances.
Projected benefit obligation $6,400,000
Fair value of plan assets 6,900,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2014, the company amends its pension agreement so that service costs of $250,000 are created. Other data related to the pension plan are as follows.
2012 2013
Service costs $180,000 $190,000
Prior service costs amortization $0 $86,000
Contributions (funding) to the plan $200,000 $206,000
Benefits paid $185,000 $215,000
Actual return on plan assets $621,000 $654,000
Expected rate of return on assets 9% 10%
Required:
(a) Prepare a pension worksheet for the pension plan for 2013 and 2014.
(b) For 2014, prepare the journal entry to record pension-related amounts.