8 to 19 are based on the following
ABC Co. had the life of its president insured for P1,200,000. ABC Co. is the beneficiary. The annual
premium is P150,000 payable every August 1 of each year. The policy was dated August 1, 2015 and carried
the following:
Cash Surrender Value
August 1, 2018 August 1, 2019 August 1, 2020 August 1, 2021
P100,000
P160,000
P250,000
P370,000
ABC Co. follows the calendar year. The president dies on March 21, 2021 and the face of the policy is
collected on May 1, 2021.
Required: Give the journal entry to record. (Round-off computations to the nearest peso).
8. January 1, 2018 reversing entry
9. August 1, 2018 payment of life insurance premium
10. August 1, 2018 recognition of cash surrender value
11. December 31, 2018 adjusting entry to take up unexpired life insurance.
12. December 31, 2018 adjusting entry to update cash surrender value.
13. January 1, 2019 reversing entry
14. August 1, 2019 payment of life insurance premium
15. December 31, 2019 adjusting entry to take up unexpired life insurance.
16. December 31, 2019 adjusting entry to update cash surrender value.
17. December 31, 2020 adjusting entry to update cash surrender value.
18. May 31, 2021 to update cash surrender value
19. May 1, 2021 collection of P1,200,000.
Chart of Accounts
A. Cash
B. Prepaid Life Insurance
C. Cash Surrender Value
D. Life Insurance Expense
E. Gain on Life Insurance