Math Problem:
The following problem appeared in the Jiban Bima Corporation's books as of December 31,
2021.
Debit Taka
Claims Less reinsurances:
By Death 22,00,000
By Maturity 15,00,000
Annuities 6,000
Furniture and Old Equipment at cost( including current year addition Tk. 2,50,000
40,000)
Office Supplies 77,000
Cash with Banks on Current Account 13,50,000
Cash and Stamps in Hand 30,000
Surrenders Less reinsurances 40,000
Commission to Insurance Agents 2,50,500
Expenses of Management 31,00,000
Sundry Deposits with Electricity Companies 500
Advance Payment of Income Tax 50,000
Sundry Debtors 50,000
Agents’ Balances 1,00,000
Income Tax 4,50,000
Income Tax on Interest, Dividends and Rents 5,00,000
Loans on Mortgages 1,50,000
Loans on Policies 32,50,000
Investments (Tk. 2,50,000 deposited with the Bangladesh Bank) 5,20,00,000
House Property at cost (including Tk. 35,000 added during the year) 54,00,000
Total 7,07,54,000
Credit Taka
Life Insurance Fund at the beginning of the year 5,00,00,000
Premiums Less Reinsurances 1,50,00,000
Claims Less reinsurances:
By Death 9,00,000
By Maturity 6,00,000
Credit Balances pending adjustment 60,000
Interest, Dividends and Rent 18,00,000
Consideration for Annuities Granted 2,000
Registration and Other Fees 2,000
Sundry Deposits 1,00,000
Provision for Taxation 3,00,000
Premium Deposits 11,50,000
Sundry Creditors 3,50,000
Contingency Reserve 1,50,000
Accumulated Depreciation- Furniture and Equipment 40,000
Accumulated Depreciation- Building 3,00,000
Total 7,07,54,000
Additional Information:
1. Claims less reinsurances outstanding at the end of the year: By Death Tk. 6,00,000 and
By Maturiry Tk. 4,00,000
2. Expenses Outstanding Tk. 60,000 and Prepaid Tk. 15,000
3. Provide Tk. 45,000 for Depreciation of Buildings and Tk. 15,000 for the depreciation of
furniture.
4. Provision for Taxation is 1,10,000
5. Premium outstanding 20,28,000 and commission thereon Tk. 65,000
6. Interest, dividends, rents outstanding Tk.380,000
7. Interim Bonus Payable during the year is Tk. 15,000
Prepare Life Revenue Account and Balance sheet for the year ended 31 December 2021
Solution
1. Claims Less Reinsurances Outstanding at Year-End
(a) By Death Tk. 6,00,000
Dr. Claims By Death A/c Tk. 6,00,000
Cr. Reinsurance Recoverable A/c Tk. 6,00,000
(To record claims less reinsurance outstanding by death)
(b) By Maturity Tk. 4,00,000
Dr. Claims By Maturity A/c Tk. 4,00,000
Cr. Reinsurance Recoverable A/c Tk. 4,00,000
(To record claims less reinsurance outstanding by maturity)
2. Outstanding and Prepaid Expenses
(a) Expenses Outstanding Tk. 60,000
Dr. Expense A/c Tk. 60,000
Cr. Outstanding Expenses A/c Tk. 60,000
(To record outstanding expenses)
(b) Prepaid Expenses Tk. 15,000
Dr. Prepaid Expenses A/c Tk. 15,000
Cr. Expense A/c Tk. 15,000
(To record prepaid expenses)
3. Depreciation on Assets
(a) Depreciation on Building Tk. 45,000
Dr. Depreciation A/c Tk. 45,000
Cr. Accumulated Depreciation - Building A/c Tk. 45,000
(To record depreciation on buildings)
(b) Depreciation on Furniture Tk. 15,000
Dr. Depreciation A/c Tk. 15,000
Cr. Accumulated Depreciation - Furniture A/c Tk. 15,000
(To record depreciation on furniture)
4. Provision for Taxation Tk. 1,10,000
Dr. Income Tax Expense A/c Tk. 1,10,000
Cr. Provision for Taxation A/c Tk. 1,10,000
(To record provision for taxation)
5. Premium Outstanding and Commission Thereon
(a) Premium Outstanding Tk. 20,28,000
Dr. Premium Receivable A/c Tk. 20,28,000
Cr. Premium Income A/c Tk. 20,28,000
(To record outstanding premium)
(b) Commission on Outstanding Premium Tk. 65,000
Dr. Commission Expense A/c Tk. 65,000
Cr. Commission Payable A/c Tk. 65,000
(To record commission on outstanding premium)
6. Interest, Dividends, Rents Outstanding Tk. 3,80,000
Dr. Interest, Dividend & Rent Receivable A/c Tk. 3,80,000
Cr. Interest, Dividend & Rent Income A/c Tk. 3,80,000
(To record outstanding interest, dividends, and rent)
7. Interim Bonus Payable Tk. 15,000
Dr. Interim Bonus Expense A/c Tk. 15,000
Cr. Interim Bonus Payable A/c Tk. 15,000
(To record interim bonus payable)
Jiban Bima Corp
Balance Sheet
31-Dec-21
Particulars Tk. Tk.
Equity and Liability:
Share Capital:
Authorized Capital:
…........ Ordinary Shares of Tk. … each Nil
Issued and Paid-Up Capital:
…........ Ordinary Shares of Tk. … each fully paid in
cash Nil
Contingency Reserve 150,000
Life Insurance Fund (Forwarded from Life Revenue Account) 61,370,500
Sundry Deposit 100,000
Provision for Taxation 300,000
Add: New Provision 110,000 410,000
Premium Deposits 1,150,000
Sundry Creditors 350,000
Accumulated Depreciation:
Buildings (300000+45000) 345,000
Furniture (40000 +15000) 55,000 400,000
Claims Outstanding:
By Death 600,000
By Maturity 400,000 1,000,000
Expenses Outstanding 60,000
Commission Payable 65,000
Bonus Payable (Interim) 15,000
Credit Balances Pending Adjustment (From Trial
Balance) 60,000
Total Equity and Liability 65,130,500
Assets:
Loans:
On Mortgages 150,000
On Policies 3,250,000 3,400,000
Investment:
With Bangladesh Bank 250,000
Others 51,750,000 52,000,000
Prepaid Expenses 15,000
Premium Outstanding from Clients 2,028,000
Interest, Dividend and Rent accrued 380,000
Advanced Income Tax 50,000
Sundry Debtors 50,000
Agents' Balances 100,000
Sundry Deposits with Electricity Companies 500
Cash and Bank Balances:
Cash with Bank on Current Account 1,350,000
Cash and Stamps in Hand 30,000 1,380,000
Other Assets:
Furniture 250,000
Office Supplies 77,000
House Property 5,400,000
Total Assets 65,130,500