Fox Co. buys a $700,000, 6%, 9-year bond at 107 with semi-annually interest, exp

ID: 2529797 • Letter: F

Question

Fox Co. buys a $700,000, 6%, 9-year bond at 107 with semi-annually interest, expecting to hold it for 8 years before selling it. Which of these is Fox's entry on purchase? Dr Available-for-sale Securities 749,000 & Cr Cash 749,000 Dr Held-to-maturity Securities 749,000 & Cr Cash 749,000 Dr Available-for-sale Securities 700,000, Dr Premium on AFS 49,000 & Cr Cash 749,000 Dr Cash 749,000 & Cr Held-to-maturity Securities 700,000 & Premium on HTM 49,000

Fox Company's defined benefit pension plan had a projected benefit obligation (PBO) of $550,000 on December 31, 2018. During 2019, service cost for the year was $60,000, discount rate for the plan was 6%, the fair value of the plan assets increased during the year by $40,000, the expected rate was 5%, contributions were $100,000, and pension benefits paid were $50,000. What was Fox's PBO at December 31, 2019? $643,000 $587,500 $693,000 $593,000 Fox Co. buys a $700,000, 6%, 9-year bond at 107 with semi-annually interest, expecting to hold it for 8 years before selling it. Which of these is Fox's entry on purchase? Dr Available-for-sale Securities 749,000 & Cr Cash 749,000 Dr Held-to-maturity Securities 749,000 & Cr Cash 749,000 Dr Available-for-sale Securities 700,000, Dr Premium on AFS 49,000 & Cr Cash 749,000 Dr Cash 749,000 & Cr Held-to-maturity Securities 700,000 & Premium on HTM 49,000

Fox Company's defined benefit pension plan had a projected benefit obligation (PBO) of $550,000 on December 31, 2018. During 2019, service cost for the year was $60,000, discount rate for the plan was 6%, the fair value of the plan assets increased during the year by $40,000, the expected rate was 5%, contributions were $100,000, and pension benefits paid were $50,000. What was Fox's PBO at December 31, 2019? $643,000 $587,500 $693,000 $593,000 Fox Co. buys a $700,000, 6%, 9-year bond at 107 with semi-annually interest, expecting to hold it for 8 years before selling it. Which of these is Fox's entry on purchase? Dr Available-for-sale Securities 749,000 & Cr Cash 749,000 Dr Held-to-maturity Securities 749,000 & Cr Cash 749,000 Dr Available-for-sale Securities 700,000, Dr Premium on AFS 49,000 & Cr Cash 749,000 Dr Cash 749,000 & Cr Held-to-maturity Securities 700,000 & Premium on HTM 49,000

Fox Company's defined benefit pension plan had a projected benefit obligation (PBO) of $550,000 on December 31, 2018. During 2019, service cost for the year was $60,000, discount rate for the plan was 6%, the fair value of the plan assets increased during the year by $40,000, the expected rate was 5%, contributions were $100,000, and pension benefits paid were $50,000. What was Fox's PBO at December 31, 2019? $643,000 $587,500 $693,000 $593,000 Fox Company's defined benefit pension plan had a projected benefit obligation (PBO) of $550,000 on December 31, 2018. During 2019, service cost for the year was $60,000, discount rate for the plan was 6%, the fair value of the plan assets increased during the year by $40,000, the expected rate was 5%, contributions were $100,000, and pension benefits paid were $50,000. What was Fox's PBO at December 31, 2019? $643,000 $587,500 $693,000 $593,000

Explanation / Answer

Answer) Dr Cash 749,000 & Cr Held-to-maturity Securities 700,000 & Premium on HTM 49,000

Note: when the bond is purchased cash comes in so cash account will be debited. And whenever a bond is purchased it always noted on face value, that is $ 700,000. In all other options, cash is credited, so all other options are wrong.

Answer ) $593,000

Note:

PBO (31 dec 2018)

550,000

Service cost

60,000

Discounted rate 6 % ( 550000*6%)

33000

Pension benifit paid

(50000)

PBO (31 dec 2019)

$ 59,3000