Chapter 1 Problem 1-20
2008
1. Cash 2,500,000
Sales 2,500,000
2. Premiums - towels 175,000
Cash 175,000
3. Cash (1,000 x 20) 20,000
Premiums expense 80,000
Premiums – towels (1,000 x 100) 100,000
4. Premium expense (1,000 X 5) 5,000
Cash 5,000
5. Premium expense 51,000
Estimated premiums payable (600 X 85) 51,000
2009
1. Estimated premiums payable 51,000
Premium expense 51,000
Cash 3,125,000
Sales 3,125,000
2. Premiums - towels 200,000
Cash 200,000
3. Cash (1,800 x 20) 36,000
Premiums expense 144,000
Premiums – towels (1,800 x 100) 180,000
4. Premium expense (1,800 X 5) 9,000
Cash 9,000
5. Premium expense 68,000
Estimated premiums payable (800 X 85) 68,000
Statement classification
2008 2009
Current asset:
Premiums – towels 75,000 95,000
Current liability:
Estimated premiums payable 51,000 68,000
Selling expense:
Premium expense 136,000 170,000
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