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II. Actuary and trustee reports indicate the following changes in the PBO and plan assets...

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Accounting

II. Actuary and trustee reports indicate the following changes in the PBO and plan assets of Sporting Goods during 2018:

Prior service cost at Jan. 1, 2018, from plan amendment at the beginning of 2015 (amortization: $2 million per year)

$14 million

Net loss-AOCI at Jan.1, 2018 (previous losses exceeded previous gains)

$40 million

Average remaining service life of the active employee group

10 years

Actuary's discount rate

7%

($ in millions)

PBO

PLAN ASSETS

Beginning of 2018

$300

Beginning of 2018

$200

Service cost

40

Return on plan assets,

8% (10% expected)

16

Interest cost, 7%

21

Loss (gain) on PBO

(7)

Cash contributions

45

Less: Retiree benefits

(19)

Less: Retiree benefits

(19)

End of 2018

$335

End of 2018

$242

Required:

a. Determine Sporting's pension expense for 2018 and prepare the appropriate journal entries to record the expense as well as the cash contribution to plan assets.

b. Prepare the appropriate journal entries to record any 2018 gains and losses.

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