Ferreri Company received the following selected information

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E20-12 (Pension Expense, Journal Entries, Statement Presentation) Ferreri Company received the
following selected information from its pension plan trustee concerning the operation of the company’s
defined benefit pension plan for the year ended December 31, 2012.

January 1, December 31,
2012 2012
Projected benefi t obligation $1,500,000 $1,527,000
Market-related and fair value of plan assets 800,000 1,130,000
Accumulated benefi t obligation 1,600,000 1,720,000
Accumulated OCI (G/L)—Net gain –0– (200,000)
The service cost component of pension expense for employee services rendered in the current year
amounted to $77,000 and the amortization of prior service cost was $120,000. The company’s actual funding
(contributions) of the plan in 2012 amounted to $250,000. The expected return on plan assets and the
actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive
income (PSC) had a balance of $1,200,000 on January 1, 2012. Assume no benefits paid in 2012.

Instructions

(a) Determine the amounts of the components of pension expense that should be recognized by the
company in 2012.

(b) Prepare the journal entry to record pension expense and the employer’s contribution to the pension
plan in 2012.

(c) Indicate the pension-related amounts that would be reported on the income statement and the
balance sheet for Ferreri Company for the year 2012.