Gordon Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2014 and 2015. 2014 2015 % A. Compute pension expense for 2014 and 2015. B.Prepare the journal entries to record the pension expense and the company’s funding of the pension plan for both years. 2014 2015Plan assets (fair value), December 31$1,423,863$1,729,413Projected benefit obligation, January 11,425,9001,629,600Pension asset/liability, January 1285,180Cr.?Prior service cost, January 1509,250488,880Service cost122,220183,330Actual and expected return on plan assets48,88861,110Amortization of prior service cost20,37024,444Contributions (funding)234,255244,440Accumulated benefit obligation, December 311,018,5001,120,350Interest/settlement rate8%8 % Solution 2014 2015 Service cost 122,220 488,880 Interest (1,425,900 *8%) 114072 130368 Expected Return on plan assets 48,888 61110 Amortization of prior service cost 20370 24,444 Pension expense 305,550 704,802 2014 2015 Service cost 122,220 488,880 Interest (1,425,900 *8%) 114072 130368 Expected Return on plan assets 48,888 61110 Amortization of prior service cost 20370 24,444 Pension expense 305,550 704,802.

1. Gordon Company sponsors a defined benefit pension plan. The following information related to
the pension plan is available for 2014 and 2015.
2014
2015
%
A. Compute pension expense for 2014 and 2015.
B.Prepare the journal entries to record the pension expense and the company’s funding of the
pension plan for both years.
2014
2015Plan assets (fair value), December 31$1,423,863$1,729,413Projected benefit obligation,
January 11,425,9001,629,600Pension asset/liability, January 1285,180Cr.?Prior service cost,
January 1509,250488,880Service cost122,220183,330Actual and expected return on plan
assets48,88861,110Amortization of prior service cost20,37024,444Contributions
(funding)234,255244,440Accumulated benefit obligation, December
311,018,5001,120,350Interest/settlement rate8%8
%
Solution
2014
2015
Service cost
122,220
488,880
Interest (1,425,900 *8%)
114072
130368
Expected Return on plan assets
48,888
61110
Amortization of prior service cost
20370
24,444
Pension expense
305,550

2. 704,802
2014
2015
Service cost
122,220
488,880
Interest (1,425,900 *8%)
114072
130368
Expected Return on plan assets
48,888
61110
Amortization of prior service cost
20370
24,444
Pension expense
305,550
704,802