Thomas, Inc

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Thomas, Inc., provides a noncontributory defined benefit plan for its 200 employees. Information from the company's pension footnote for the year ended December 31, 2004, and partial informa- tion for the year ended December 31, 2005, are given below:

 

	12/31/04	12/31/05
Fair value of plan assets .............	$1,347,500	$1,225,000
Projected benefit obligation ..........	(1,587,500)	(1,475,000)
Unrecognized prior service cost .......	113,095
Unrecognized loss .....................	163,750
Prepaid pension cost ..................	36,845
Additional pension liability ..........	(64,345)
Prepaid/(accrued) pension cost ........	(27,500)

The company's actuary indicated that the settlement rate and expected rate of return on plan as- sets were both 8% for 2004 and 2005. The company contributed $221,250 to the plan at the end of 2005. Service cost for 2005 was $125,000. The actuary also disclosed that the accumulated be- nefit obligation was $1,375,000 on December 31, 2004, and $1,200,000 on December 31, 2005.

On January 1, 2004, the company amended its plan to grant retroactive credit for prior service rendered by employees prior to the amendment. This amendment increased unrecognized prior service cost by $125,000 at that date. The prior service cost is being amortized over the average remaining service life of the employees affected by the amendment. The average remaining ser- vice life of the workforce in each year has been constant at 10.5 years.

1. 1. Prepare a schedule computing pension cost for 2005.
   2. Prepare the journal entries to record pension expense and the pension contribution, and to recognize the correct minimum liability, if any.
   3. Prepare the reconciliation between the beginning and ending balances of the pro- jected benefit obligation as required by GAAP for the disclosures related to pen- sion plans.