Valix Finacc vol 1 Problem 13-13

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-13

a. Life insurance (10,000 x 6/12)                                                              5,000

            Cash surrender value                                                                                         5,000

b. Prepaid life insurance (28,000 x 1/2)                                                14,000

            Life insurance                                                                                                   14,000

c. Interest expense                                                                                 4,500

           Accrued interest payable (50,000 x 12% x 9/12)                                                  4,500

                                                                                      

d. Dividend income                                                                               2,000

           Dividend receivable                                                                                            2,000

Current assets:

      Prepaid life insurance                                                                                              14,000

Investment:

     Cash surrender value                                                                                               85,000

Current liabilities:

      Loan payable                                                                                                          50,000

      Accrued interest payable                                                                                          4,500