Final answer:
The amount of the December 31, 2014, projected benefit obligation is C. $2,530,000.
Step-by-step explanation:
The amount of the December 31, 2014, projected benefit obligation can be calculated by considering the beginning balance, service cost, interest cost, payments to retired employees, and the actual return on plan assets.
To calculate the projected benefit obligation, we need to add the beginning balance, service cost, and interest cost, and then subtract the payments to retired employees.
Given information:
- Projected benefit obligation, January 1, 2014: $1,650,000
- Service cost, 2014: $850,000
- Interest cost, 2014: $125,000
- Payments to retired employees: $95,000
- Actual return on plan assets: $109,600
Calculations:
Projected benefit obligation, December 31, 2014 = Projected benefit obligation, January 1, 2014 + Service cost, 2014 + Interest cost, 2014 - Payments to retired employees
Projected benefit obligation, December 31, 2014 = $1,650,000 + $850,000 + $125,000 - $95,000
Projected benefit obligation, December 31, 2014 = $2,530,000
Therefore, the correct answer is C. $2,530,000.
Complete question:
The Maggie Company has a defined benefit pension plan for its employees. The following information pertains to the pension plan as of December 31, 2014:
- Projected benefit obligation, January 1, 2014 $1,650,000
- Service cost, 2014 850,000
- Interest cost, 2014 125,000
- Payments to retired employees 95,000
- Actual return on plan assets 109,600
The amount of the December 31, 2014, projected benefit obligation is
- A. $2,515,400
- B. $2,270,400
- C. $2,530,000
- D. $2,420,400