On Jan. 1, 2010, ABC entered into an insurance contract covering the life of its founder. The P100,000 annual insurance premium is payable at the start of the year. By the end of the fifth year, the insurance will have a cash surrender value and it was as follows for the following years: Year Cash Surrender Value 2014 P80,000 2015 100,000 2016 130,000 2017 180,000 a.) What is the journal entry on Dec. 31, 2014, to recognize the cash surrender value and adjust the related accounts? Parenthetical solutions would suffice. b )If the founder died on Mar 31, 2017, what is the journal entry to update the cash surrender value on the said date? c.) Continuing from the previous number and assuming further that P3,000,000 was received from the insurance, what is the journal entry to record the gain on settlement and make the final adjustment to the insurance expense?
On Jan. 1, 2010, ABC entered into an insurance contract covering
the life of its founder. The P100,000 annual insurance premium is
payable at the start of the year. By the end of the fifth year, the
insurance will have a cash surrender value and it was as follows for
the following years:
Year Cash Surrender Value
2014 P80,000
2015 100,000
2016 130,000
2017 180,000
a.) What is the
cash surrender value and adjust the related accounts?
Parenthetical solutions would suffice.
b )If the founder died on Mar 31, 2017, what is the journal
entry to update the cash surrender value on the said date?
c.) Continuing from the previous number and assuming further
that P3,000,000 was received from the insurance, what is
the journal entry to record the gain on settlement and make
the final adjustment to the insurance expense?
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