Valix Finacc vol 2 Problem 1-21 and 22

Financial Accounting Volume 2 2008 Valix-Peralta
Chapter 1 Problem 1-21 and 22

Problem 1-21  Answer  B                                   Problem 1-22  Answer  D

Coupons to be redeemed                                          Premiums to be distributed

    (160,000 x 60%)                              96,000          (250,000 x 80% / 10)                    20,000

Less: Coupons redeemed              40,000       Premiums distributed                    15,000

Balance                                             56,000       Balance                                           5,000

Number of premiums (56,000 / 5)  11,200       Premium liability (5,000 x 100)    500,000

Amount of liability (11,200 x 20)   224,000