Trial Balance of Deon Insurance Company Limited as at 31st December, 2019   Debit Credit Claims paid 8,834,289   Commissions paid 142,583   Interest paid 4,000,000   Staff cost 29,053,167   Audit fees 130,767   Other income- Interest on investment   2,666,667 Reinsurance claims recovered   2,466,667 Stated capital   15,533,335 Capital surplus   9,588,327 Income surplus   3,919,560 Contingency reserve   6,441,634 Building 12,916,647   Motor vehicle 5,332,255   Equipment and furniture 9,042,985   Acc. Dep: Building   2,287,357 Acc. Dep: Motor vehicle   3,364,404 Acc. Dep: Equipment and furniture   1,102,471 Gross premium   90,740,819 10% Debenture   70,000,000 Premium returned and cancelled 10,000,000   Reinsurance premium paid 27,603,132   Intangible assets 35,797,721   Investment properties 34,295,050   Receivables 12,121,312   Prepayment 10,705,063   Unexpired risk reserve   9,817,443 Cash and bank 23,005,933   Outstanding claims payable   5,052,220   222,980,904 222,980,904 Additional Information Audit fees accrued for the year ended 31st Dec 2019 was GHȼ1,520. The company pays interest on 10% debenture semi-annual. Unexpired reserve risk is calculated at 25% Assume corporate tax is 25% Depreciation is to be accounted for on the following basis: Buildings                                        5%                   Straight line method Motor vehicles                               20%                 Reducing balance method Equipment and furniture                10%                 Straight line method In compliance with the Insurance Act (Act 724) 20% of net profit after tax is to be transferred to contingency reserve. Required: Prepare the following financial statements of Deon Insurance Limited for publication in accordance with relevant legislations: Prepare the Statement of Comprehensive Income for the year ended 31st December, 2019 Prepare the Statement of Changes in Equity for the ended 31st December, 2019 Prepare the Statement of Financial Position as at 31st December, 2019.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Trial Balance of Deon Insurance Company Limited as at 31st December, 2019

 

Debit

Credit

Claims paid

8,834,289

 

Commissions paid

142,583

 

Interest paid

4,000,000

 

Staff cost

29,053,167

 

Audit fees

130,767

 

Other income- Interest on investment

 

2,666,667

Reinsurance claims recovered

 

2,466,667

Stated capital

 

15,533,335

Capital surplus

 

9,588,327

Income surplus

 

3,919,560

Contingency reserve

 

6,441,634

Building

12,916,647

 

Motor vehicle

5,332,255

 

Equipment and furniture

9,042,985

 

Acc. Dep: Building

 

2,287,357

Acc. Dep: Motor vehicle

 

3,364,404

Acc. Dep: Equipment and furniture

 

1,102,471

Gross premium

 

90,740,819

10% Debenture

 

70,000,000

Premium returned and cancelled

10,000,000

 

Reinsurance premium paid

27,603,132

 

Intangible assets

35,797,721

 

Investment properties

34,295,050

 

Receivables

12,121,312

 

Prepayment

10,705,063

 

Unexpired risk reserve

 

9,817,443

Cash and bank

23,005,933

 

Outstanding claims payable

 

5,052,220

 

222,980,904

222,980,904

Additional Information

  • Audit fees accrued for the year ended 31st Dec 2019 was GHȼ1,520.
  • The company pays interest on 10% debenture semi-annual.
  • Unexpired reserve risk is calculated at 25%
  • Assume corporate tax is 25%
  • Depreciation is to be accounted for on the following basis:

Buildings                                        5%                   Straight line method

Motor vehicles                               20%                 Reducing balance method

Equipment and furniture                10%                 Straight line method

  • In compliance with the Insurance Act (Act 724) 20% of net profit after tax is to be transferred to contingency reserve.

Required:

Prepare the following financial statements of Deon Insurance Limited for publication in accordance with relevant legislations:

  • Prepare the Statement of Comprehensive Income for the year ended 31st December, 2019
  • Prepare the Statement of Changes in Equity for the ended 31st December, 2019
  • Prepare the Statement of Financial Position as at 31st December, 2019.
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