Warren, Inc. purchased a $400,000 life insurance policy on the company president on January 1, 2017. The premium that was paid on January 1 amounted to $11,600. In the first year, cash surrender value increased by $900 and dividends received by Warren from the insurance company for the year amounted to $300. What was Warren's insurance expense for 2017?

Question

Quizplus · Accepted Answer

Warren's insurance expense for 2017 is calculated by subtracting the increase in cash surrender value and the dividends received from the premium paid. Thus, $11,600 (premium paid) - $900 (increase in cash surrender value) - $300 (dividends received) = $10,400.