Del Pilar Inc. insured the life of its president for P5,000,000, the corporation being the beneficiary of anordinary life policy. The monthly premium is P18,000 payable every first day of the month. The policy isdated January 1, 2019 and carries the following cash surrender values:End of policy yearCash surrendervalue201920202021202220232024125,600140,000168,800201,200The corporation follows the calendar year as its fiscal period. The president died on October 31, 2024.What is the gain on life insurance policy?January 2023

Life insurance policy is defined as the policy taken in order to insure the risk of loss of life of…

Answered: Del Pilar Inc. insured the life of its…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2020, a company issued P10,000,000 bonds that will mature in 5 years. The management decided to set up a separate fund for the retirement of these bonds. The fund is to be placed in a separate account to be maintained in the company's depository bank.In a board resolution, it was decided that deposits of equal amounts will be made every June 30 and December 31, starting June 30, 2020 up to December 31, 2024. The company expects to earn an average interest of 10%, net of tax, on this investment. How much is the required semi-annual deposit that will accumulate P10,000,000 at the end of five years? A. P1,637,975 B. P1,295,052 C. P1,000,000 D. P 795,045
Greener Pastures Corporation borrowed $1,950,000 on November 1, 2021. The note carried a 9 percent interest rate with the principal and interest payable on June 1, 2022. (a) The note issued on November 1. (b) The interest accrual on December 31. Indicate the effects of the amounts for the above transactions.
On January 1, 2021, ABC Company acquired an equipment from DEF Company in lieu of cash payment, ABC Company gave DEF Company a 3-year, 3%, P2,000,000 interest-bearing note payable. The interest is payable every December 31 while the principal shall be payable as follows: December 31, 2021, P1,200,000; December 31, 2022, P400,000; and December 31, 2023, P400,000. The prevailing rate of interest for this type of note is 12%. How much is the carrying amount of the note of December 31, 2021? How much is the current portion of the note due on December 31, 2021?
Lewis Industries adopted a defined benefit pension plan on January 1, 2021. By making the provisions of the plan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost was funded immediately by a $2 million cash payment to the fund trustee on January 2, 2021. However, the cost is to be amortized (expensed) over 10 years. The service cost—$250,000 for 2021—is fully funded at the end of each year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actual rate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retired during 2021.Required:Determine each of the following amounts as of December 31, 2021, the fiscal year-end for Lewis:1. Projected benefit obligation.2. Plan assets.3. Pension expense.
Balintawak Inc. insured the life of its president for P4,000,000, the corporation being the beneficiary of an ordinary life policy. The monthly premium is P22,500 payable every first day of the month. The policy is dated January 1, 2019 and carries the following cash surrender values: End of policy year 2019 2020 2021 2022 2023 2024 Cash surrender value 94,500 112,500 148,500 189,000 The corporation follows the calendar year as its fiscal period. The president died on October 1, 2024. What is the gain on life insurance policy?
In 2015, Maine Corporation bought a $5,000,000 life insurance policy on its president, of which Maine Corporation is the beneficiary. Information regarding the policy for the year ended December 31,2020 follows: Cash surrender value, 1/1/2020 : $435,000 Cash surrender value, 12/31/2020 : $540,000 Annual advance premium paid 1/1/2020 : $200,000 During 2020, dividends of $30,000 were applied to increase the cash surrender value of the policy. How much should be the life insurance expense for 2020?
Hunter Corporation pays an annual insurance premium of $8,500 to cover the lives of its board officers. According to the terms of the insurance contract, the cash surrender value of the policies increase from $10,000 to $11,500 during that year. The adjusting entry that Hunter would record at the end of the year to increase the cash surrender value would include a credit to Insurance Expense for $8,500. debit to Prepaid Insurance for $8,500. debit to Cash Surrender Value of Life Insurance for $1,500. credit to Cash for $1,500.
Edward purchased a new piece of equipment to be used in its new facility. The $445,000 piece of equipment was purchased with a $66,750 down payment and with cash received through the issuance of a $378,250, 9%, 5-year mortgage payable issued on January 1, 2022. The terms provide for annual installment payments of $97,245 on December 31. 1. Prepare an installment payments schedule for the first five payments of the notes payable 2. Prepare the journal entry related to the notes payable for December 31, 2022. 3. Show the balance sheet presentation for this obligation for December 31, 2022. (Hint: Be sure to distinguish between the current and long-term portions of the note.)
Nakasiguro Company insured its president for P 5,000,000 with an annual premium, paid initially at the beginning of 2021, for P 80,000. Nakasiguro is the beneficiary. The following transactions aside from the regular premium payment, took place. Cash Surrender Value Dividends Received (at year end) 2023 P 60,000 P 5,000 2024 72,000 3,000 2025 84,000 - 2026 92,000 4,000 The President died April 1, 2026. How much is the Cash Surrender Value be reported, before any claim, when the President died? a. 66,000 b. 86,000 c. 64,000 d. 84,000
On December 31, 2020, Stormy & Co. started a defined benefit plan for its president. The plan provides for an annual pension to the executive, equal to 2% of the executive’s highest lifetime salary multiplied by number of years of service within the entity. On date of establishment, the president already has worked for ten years, and his current salary as of this date is P500,000. The president is expected to retire in 25 years, and his/her salary is expected to increase by 3% on average. He/she is also estimated to have a life expectancy of 15 years after retirement and will receive his/her annual pension at the end of each year after retirement. Market yield of high-quality corporate bonds is 8%. Below is the relevant PV and Future Value (FV) factors:· Future value of 1 at 3% for 25 periods: 2.094· PV of an ordinary annuity at 8% for 15 periods: 8.559· PV of 1 at 8% for 25 periods: 0.146How much is the projected benefit obligation upon establishment of the…
On January 1, 2021, Jalen Company purchased land costing $800,000. Instead of paying cash at the time of purchase, Jalen plans to make four installment payments of $215,221.64 on June 30 and December 31 in 2021 and 2022. The payments include interest at a rate of 6%. Required: 1. Record the purchase of land when the note is issued. 2. Record the first installment payment on June 30, 2021, and the second installment payment on December 31, 2021. 3. Calculate the balance of Notes Payable and Interest Expense on December 31, 2021.
On January 1, 2020, Ann Price loaned $157773 to Joe Kiger. A zero-interest-bearing note (face amount, $210000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2022. The prevailing rate of interest for a loan of this type is 10%. The present value of $210000 at 10% for three years is $157773. What amount of interest income should Ms. Price recognize in 2020? $44350. $63000. $15777. $21000.

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