Thankfully, I have figured this problem out. Guess the 4th day is the charm. Lol

I have been working on this problem for 4 days now and can't seem to get anywhere close to figuring it out. I am posting the question as it is seen in the book in blue, but I do NOT want the answer to the questions just supplied to me. I want to be able to understand this stuff.

Gordon Company sponsors a defined benefit plan. The following information related to the pension plan is available for 2010 and 2011.

2010 2011
Plan assets (fair value), Dec. 31 $699,000 $849,000
Projected benefit obligation, Jan. 1 700,000 800,000
Pension asset/liability, Jan. 1 140,000 Cr ?
Prior service cost, Jan. 1 250,000 240,000
Service cost 60,000 90,000
Actual return on plan assets 24,000 30,000
Amortization of prior service cost 10,000 12,000
Contributions (funding) 115,000 120,000
Accum. Benefit obligation, Dec 31 500,000 550,000
Interest/settlement rate 9% 9%

(a) Pension Expense 2010
(b) Pension Expense 2011
(c) Prepare journal entries.

2010 ____________ Dr $______
____________ Dr $______
___________ Cr $______
___________ Cr $______
___________ Cr $______
2011 ____________ Dr $______
___________ Cr $______
___________ Cr $______
___________ Cr $______

While the questions ask for the information, I was going a step further and wanted to build a worksheet to make sure I am understanding this information. Thus far, I have created a worksheet, which I am not sure is correct because it does not have "Accumulated benefit obligation, December 31" accounted for on the worksheet. Ironically, the only mention the book has for accumulated benefit obligation (ABO) is in this question and a small blurb about it in the book. It does not reference it at all in relation to worksheets. In doing research online, I found ABO is an approximate measure of a company's pension plan liability. The ABO is estimated based on the assumption that the pension plan is to be terminated immediately; it does not consider any future salary increases. This differs from the projected benefit obligation, which assumes that the pension plan is ongoing, and thus accounts for future salary increases.

I used a previous question that was similar that I got correct to create this balance sheet. If I calculated the "Balance, January 1, 2010" incorrect, then I know the interest cost is incorrect and subsequently, the calculated pension expense for 2010 is incorrect, as is the "Projected Benefit Obligation" for the Balance, December 31, 2010. Where is "Accumulated benefit Obligation" accounted for on a worksheet? I was thinking it would be "Accum. OCI, Dec. 31, 2009" but if it is, where is it credited and where is it debited? Please help me if you can.

I can't paste the worksheet here because it contorts it too much, so I uploaded it to a website as a .doc file. You shouldn't have to download it if you don't want to. Just go to the link and it will show you what the file as an html file.

Gordon Company sponsors a defined benefit pension .docx - DocDroid (http://www.docdroid.net/q4m/gordon-company-sponsors-a-defined-benefit-pension-plan.docx.html)