Problem 22-13 (IAA) Elysee Company reported the following accounts under assets on December 31, 2021: current 90,000 Cash surrender value Policy loan from insurance company Dividend receivable from insurance company (50,000) 40,000 2,000 The above accounts are the only ones in the statement of financial position which pertain to the insurance policy or the loan.
Problem 22-13 (IAA) Elysee Company reported the following accounts under assets on December 31, 2021: current 90,000 Cash surrender value Policy loan from insurance company Dividend receivable from insurance company (50,000) 40,000 2,000 The above accounts are the only ones in the statement of financial position which pertain to the insurance policy or the loan.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 22-13 (IAA)
Elysee Company reported the following accounts under current
assets on December 31, 2021:
90,000
Cash surrender value
Policy loan from insurance company
Dividend receivable from insurance company
(50,000)
40,000
2,000
The above accounts are the only ones in the statement of
financial position which pertain to the insurance policy or the
loan.
Upon investigation, the following data are gathered:
a. The cash surrender value of P90,000 reported in the
statement of financial position -is for June 30, 2022.
The cash surrender value was P80,000 on June 30, 2021.
b. On June 30, 2021, the entity paid the annual premium of
P30,000 minus the dividend declared of P2,000.
c. The loan from the insurance company is a one-year note
dated April 1, 2021.
The 12% interest is payable on the date of maturity.
d. The dividend declared was recorded by debiting dividend
receivable and crediting dividend income.
Required:
1. Prepare journal entries to correct the accounts on December
31, 2021.
2. Indicate the financial statement classification of the
accounts related to the insurance policy and the loan.
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