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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