Posted: July 9th, 2016

When is a credit note used?

The following defined pension data of Rydell Corp. apply to the year 2010.

Projected benefit obligation, 1/1/10 (before amendment) $560,000
Plan assets, 1/1/10 546,200
Pension liability 13,800
On January 1, 2010 Rydell Corp. through plan amendment, grants prior service benefits having a present value of
120,000
Settlement rate 9% Interest cost $680,000 x .09 =
Service cost 58,000 $61,200
Contributions (funding) 65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2010 17,000

For 2010, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
On the first day of the current fiscal year, $1,000,000 of 10-year, 7% bonds, with interest payable semiannualy were sold for $1,050,000. Present entries to record the following transactions for the current fiscal year:
(a) Issuance of the bonds
(b) First semiannual interest payment
(c) Amoritization of bond discount for the year, using the straight-line method of amortization.