Problem 40:-The Life Insurance Fund of an Insurance Company was on 31-3-2016 $ 60 lakh before providing for dividend of $ 20,000 for the year 2015-16. While ascertaining the above fund figure, the following items were omitted : Interest received on investments $ 63,000 after deduction of tax at source 10%. (i) (ii) (ii) (iv) (v) Bonus utilized for reduction of premium $ 14,000. Death claim intimated, but not yet admitted $ 36,000. Death claim covered under re-insurance $ 12,000. Consideration for annuities granted $ 9,000. Interim bonus for the valuation period paid was $ 80,000. Net liabilities as per valuation was $ 50 lakhs. It is now proposed to carry forward $ 2,70,000. The company declared a reversionary bonus of $ 12 per $ 1,000 and gave the policyholders an option to get the bonus in cash of $ 5 per $ 1,000. Total business of the company is $ 15 crores, 40% of the policyholders decided to get bonus in cash. Prepare : (i) (ii) Valuation Balance Sheet as on 31-3-2016. Distribution Statement showing the amount due to policyholders as bonus. Also give journal entry relating to reversionary bonus.

Problem 40:-The Life Insurance Fund of an Insurance Company was on 31-3-2016 $ 60 lakh before providing for dividend of $ 20,000 for the year 2015-16. While ascertaining the above fund figure, the following items were omitted : Interest received on investments $ 63,000 after deduction of tax at source 10%. (i) (ii) (ii) (iv) (v) Bonus utilized for reduction of premium $ 14,000. Death claim intimated, but not yet admitted $ 36,000. Death claim covered under re-insurance $ 12,000. Consideration for annuities granted $ 9,000. Interim bonus for the valuation period paid was $ 80,000. Net liabilities as per valuation was $ 50 lakhs. It is now proposed to carry forward $ 2,70,000. The company declared a reversionary bonus of $ 12 per $ 1,000 and gave the policyholders an option to get the bonus in cash of $ 5 per $ 1,000. Total business of the company is $ 15 crores, 40% of the policyholders decided to get bonus in cash. Prepare : (i) (ii) Valuation Balance Sheet as on 31-3-2016. Distribution Statement showing the amount due to policyholders as bonus. Also give journal entry relating to reversionary bonus.

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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