Chapter 1 Problem 13-10
2008
Jan. 1 Life insurance 60,000
Cash 60,000
2009
Jan. 1 Life insurance 60,000
Cash 60,000
2010
Jan. 1 Life insurance 60,000
Cash 60,000
Dec. 31 Cash surrender value 60,000
Life insurance 20,000
Retained earnings 40,000
2011
Jan. 1 Life insurance 60,000
Cash 60,000
Dec. 31 Cash surrender value 24,000
Life insurance 24,000
Balance – December 31, 2011 84,000
Balance – December 31, 2010 60,000
Increase in cash surrender value 24,000
2012
Jan. 1 Life insurance 60,000
Cash 60,000
June 30 Cash surrender value 16,000
Life insurance 16,000
Balance – December 31, 2012 116,000
Balance – December 31, 2011 84,000
Increase in cash surrender value for 2012 32,000
Increase from January 1 to June 30, 2012 (1/2 x 32,000) 16,000
July 31 Cash 2,000,000
Cash surrender value 100,000
Life insurance (60,000 x 6/12) 30,000
Gain on sale of life insurance settlement 1,870,000
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