Pension data for barry financial services inc. include the following: ($ in 000s) discount rate, 7% expected return on plan assets, 11% actual return on plan assets, 10% service cost, 2016 $ 410 january 1, 2016: projected benefit obligation 2,800 accumulated benefit obligation 2,500 plan assets (fair value) 2,900 prior service cost–aoci (2016 amortization, $45) 375 net gain–aoci (2016 amortization, $10) 430 there were no changes in actuarial assumptions. december 31, 2016: cash contributions to pension fund, december 31, 2016, 345 benefit payments to retirees, december 31, 2016 370 (for all requirements, enter your answers in thousands rounded to 1 decimal place (i. e., 5,500 should be entered as 5. required: 1. determine pension expense for 2016. (amounts to be deducted should be indicated with a minus sign.) 2. prepare the journal entries to record pension expense, gains and losses (if any), funding, and retiree benefits for 2016.

(1) $322

Explanation:

(1) Pension Expense:

= Service Cost + Interest Cost - Expected rate of return + Amortization of prior service cost - Amortization of prior net gain

= $410 +  (2800 × 7%) - (290 actual + 29 loss) + $45 - $10

= $410 + $196 - $319 + $45 - $10

= $322

(2) The journal entries are as follows:

(i) Pension expense A/c                    Dr. $322

Plan assets A/c                                  Dr. $319

Amortization of net gain – OCI A/c  Dr. $10

To Amortization of prior service-cost – OCI         $45

To PBO                                                                     $606

(To record pension expense)

(ii) Loss – OCI  A/c     Dr.   $29

To plan assets                            $29

(To record loss on assets)

Working:

Loss on assets = {2900(11%-10%)}

                         =  2900 × 1%

                         = $29

(iii) Plan assets A/c   Dr.    $345

To cash                                         $345

(To record funding)

(iv) PBO A/c     Dr. $370

To plan assets                $370

(To record Retiree benefits)