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P20-4 Gordon Company sponsors a defined

Price: $2.50


Gordon Company sponsors a defined benefit

pension plan. The following information related to the pension plan is available for 2012 and 2013.

  2012 2013
Plan assets (fair value), December 31  $699,000 $849,000
Projected benefit obligation, January 1  700,000 800,000
Pension asset/liability, January 1  140000
Prior service cost, January 1  250,000 240,000
Service cost  60,000 90,000
Actual and expected return on plan assets  24,000 30,000
Amortization of prior service cost  10,000 12,000
Contributions (funding)  115,000 120,000
Accumulated benefit obligation, December 31  500,000 550,000
Interest/settlement rate  9% 9%

Instructions
(a) Compute pension expense for 2012 and 2013.
(b) Prepare the journal entries to record the pension expense and the company’s funding of the pension
plan for both years.

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