Pension data for Barry Financial Services Inc. include the following: ($ in thousands) Discount rate, 7% Expected return on plan assets, 10% Actual return on plan assets, 9% Service cost, 2021 $ 340 January 1, 2021: Projected benefit obligation 2,450 Accumulated benefit obligation 2,150 Plan assets (fair value) 2,550 Prior service cost—AOCI (2021 amortization, $40) 340 Net gain—AOCI (2021 amortization, $6) 360 There were no changes in actuarial assumptions. December 31, 2021: Cash contributions to pension fund, December 31, 2021 275 Benefit payments to retirees, December 31, 2021 300 Required: 1. Determine pension expense for 2021. 2. Prepare the journal entries to record (a) pension expense, (b) gains and losses (if any), (c) funding, and (d) retiree benefits for 2021.

1. Pension expense $291

2.A. Pension expense

Dr Pension expense $291

Dr Plan assets (expected plan assets) $255

Dr Net gain -aoci6

Cr Prior service cost- oci 40

Cr PBO $512

B. Gains and losses

Dr Loss-oci 25

Dr Plan assets 25

(c) funding

Dr Plan assets $275

Cr cash 275

D. retiree benefits for 2021.

Dr PBO 300

Cr Plan assets 300

Explanation:

1. Calculation to determine the Pension Expense

PENSION EXPENSE

Service cost (given) $340

Add Interest cost $172

Less Expected return on plan assets ($255)

Add Prior service cost $40

Less Net gain or (loss) (6))

PENSION EXPENSE $291

2. Preparation of the journal entries to record

(a) pension expense

Dr Pension expense $291

Dr Plan assets (expected plan assets) $255

Dr Net gain -aoci6

Cr Prior service cost- oci 40

Cr PBO (service cost + interest cost)$512

($340+$172)

b. gains and losses

Dr Loss-oci 25

Dr Plan assets 25

(c) funding

Dr Plan assets $275

Cr cash 275

D. retiree benefits for 2021.

Dr PBO 300

Cr Plan assets 300

Working :

Projected benefit obligation ($2,450) x Discount rate (.07) = $172 Interest cost

Plan assets (fair value) ($2,550) x Expected return on plan assets (.10) = $255

Plan assets (fair value) ($2,550) x Actual return on plan assets (.09) =$230

Gain or (loss on plan assets) $255-$230 = ($25) loss

Service cost (given) =$340

Prior service cost (given)= 40

Benefit payments to retirees, December 31, 2013= $300

Cash contributions to pension fund, December 31, 2021 (given)= 275

Net gain or (loss) (given) = (6)Net gain–AOCI (2021 amortization

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