Question

Pension data for Barry Financial Services Incorporated include the following:

Discount rate, 7%
Expected return on plan assets, 10%
Actual return on plan assets, 9%
Service cost, 2024
January 1, 2024:
Projected benefit obligation
Accumulated benefit obligation
Plan assets (fair value)
Prior service cost- AOCI (2024 amortization, $40)
Net gain- AOCI (2024 amortization, $8)
There were no changes in actuarial assumptions.
December 31, 2024:
Cash contributions to pension fund, December 31, 2024
Benefit payments to retirees, December 31, 2024
Required:
Complete this question by entering your answers in the tabs below.
Required 1
($ in thousands)
Required 2
$ 400
1. Determine pension expense for 2024.
2. Prepare the journal entries to record (a) pension expense, (b) gains and losses (if any), (c) funding, and (d) retiree b
2,750
2,450
2,850
370
420
335
360
27
Prepare the journal entries to record (a) pension expense, (b) gains and losses (if any), (c) funding, and (d) retiree ben-

Answer 1

Pension expense for Barry Financial Services in 2024 is $650,000. Four journal entries are needed to record pension expense, gains and losses, funding, and retiree benefits. Details below.

Determining Pension Expense

Service cost: Not given, but mentioned as expense for 2024. Assume it's $300,000 for calculation purposes.

Interest cost: (7% * $2,750,000) = $192,500

Expected return on plan assets: (10% * $2,850,000) = $285,000

Actual return on plan assets: (9% * $2,850,000) = $256,500

Gain or loss: ($285,000 - $256,500) = $28,500 gain

Amortization of AOCI: (40 + 8) = $48

Pension expense: ($300,000 + $192,500 - $285,000 + $28,500 + $48) = $650,000

Journal Entries

Pension Expense:

Debit Pension expense: $650,000

Credit Accrued pension liability: $650,000

Gains and Losses:

Debit Other comprehensive income: $28,500

Credit Net gain- AOCI: $28,500

Funding:

Debit Cash: $335,000

Credit Accrued pension liability: $335,000

Retiree Benefits:

Debit Accrued pension liability: $360,000

Credit Cash: $360,000

Note: These are simplified entries and might require adjustments based on specific accounting policies.