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 |
|---|---|
| A | 1 |
| B | 3 |
| C | 4 |
| D | 5 |
| E | 5 |
| F | 6 |
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:
| 2016 | 2017 | |
|---|---|---|
| Service cost | $397,300 | $567,423 |
| 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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