On January 1, 2016, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,200,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2016:
|Employee||Expected Years of Future Service|
Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik’s pension expense, in addition to the amortization of the prior service cost for 2016 and 2017:
|Interest cost on projected benefit obligation||104,100||150,337|
|Expected return on plan assets||—||90,300|
Baznik contributed $772,700 and $875,300 to the pension fund at the end of 2016 and 2017, respectively.Required:
|2.||Next Level determine the journal entries related to Baznik’s pension plan for 2016 and 2017.|
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