Big Books, Inc. has the following information related to its defined benefit pension plan: December...
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Accounting
Big Books, Inc. has the following information related to its defined benefit pension plan:
December 31, Year 6:
Projected benefit obligation
$1,950,000
Fair value of plan assets
1,820,000
Unrecognized prior service cost
260,000
December 31, Year 7:
Projected benefit obligation
$2,301,000
Fair value of plan assets
2,116,400
Service cost
286,000
Assumptions:
Discount rate
8%
Expected return on plan assets
10%
Big Books makes an annual pension plan contribution of $260,000. The company's employees had an average remaining service life of 20 years on 12/31/Year 6. The company paid benefits of $91,000 in Year 7 and expects to pay benefits totaling $203,000 to retired employees in Year 8. Big Books has an effective tax rate of 30%. The actual return on plan assets was 7%. What would Big Books report as total net periodic pension cost for Year 7?
A.
$269,100
B.
$276,900
C.
$297,180
D.
$273,000
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