Reference no: EM132951814

Question - Preparing a pension work sheet - The accountant for Heritage Corporation has developed the following information for the company's defined-benefit pension plan for 2021:

Service cost $1,000,000

Actual return on plan assets 500,000

Annual contribution to the plan 1,840,000

Amortization of prior service cost 250,000

Benefits paid to retirees 120,000

Settlement rate 10%

Expected rate of return on plan assets 8%

The accumulated benefit obligation at December 31, 2021, amounted to $6,500,000.

Other information pertaining to the benefit plan as of December 31, 2020 was as follows:

Unamortized prior service costs $1,250,000

Pension liability 2,500,000

Projected benefit obligation 8,000,000

Fair value of plan assets 5,500,000

Required -

(a) Using the above information for Heritage Corporation, complete the pension work sheet for 2021. Indicate (credit) entries by parentheses. Calculated amounts should be supported.

(b) Prepare the journal entry to reflect the accounting for the company's pension plan for the year ending December 31, 2021.