Quadra Corp. insured its president on January 1, 2014, with a $2,000,000 life insurance policy. The annual premium was $60,000 payable on January 1 of each year. Cash surrender values increased each year by 5% of the premium paid. Dividends received in the first year (2014) amounted to $2,000 and increased by 10% each year, accruable at year-end only.
Required:
a.Compute insurance expense for 2015.
b.Prepare journal entries for July 1, 2016, when the president died.

Question

Quadra Corp. insured its president on January 1, 2014, with a $2,000,000 life insurance policy. The annual premium was $60,000 payable on January 1 of each year. Cash surrender values increased each year by 5% of the premium paid. Dividends received in the first year (2014) amounted to $2,000 and increased by 10% each year, accruable at year-end only.
Required: 
a.Compute insurance expense for 2015.
b.Prepare journal entries for July 1, 2016, when the president died.

Quizplus · Accepted Answer

The Answer of Quadra Corp. insured its president on January 1, 2014, with a $2,000,000 life insurance policy. The annual premium was $60,000 payable on January 1 of each year. Cash surrender values increased each year by 5% of the premium paid. Dividends received in the first year (2014) amounted to $2,000 and increased by 10% each year, accruable at year-end only.
Required: 
a.Compute insurance expense for 2015.
b.Prepare journal entries for July 1, 2016, when the president died.