Transport travelling 1625 repairs renewals 875

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Transport & travelling1,625Repairs & renewals875Statutory deposit25,000Directors’ fees & expenses1,978Depreciation842Legal & other professional fees3,475Staff pension1,658Federal Govt. Development stock23,781.2Treasury bills & certificates15,000Cash at bank8,725Loans on policies65,005-225,472.17225,472.17The following additional information are provided:1.The estimated income tax liability of2.5 million is to be provided for on the profit of theyear.
672.The following analysis was provided:FireMotorGeneralTotalAccidentClaims6,258,00010,257,0006,492,25023,007,250Premiums20,844,38034,855,890 13,731,73069,432,000Agent commission875,5002,316,0001,030,0004,221,500Re-insurance premium1,492,5402,537,310970,1505,000,000Commission receivable2,624,7105,621,3804,213,58012,459,670Outstanding reserves- 31/12/2008:Contingency3,624,0005,682,1201,981,38011,287,500Outstanding claims855,6001,382,5201,008,4803,246,600Unexpired risk3,726,7007,580,6002,710,40014,017,7003.Provision for bad debts is to be increased to7,641,300.4.Unallocated management expenses to be apportioned on the basis of premium received.5.Dividend of 10K per ordinary share is proposed on the ordinary share capital.6.The following transfers are to be made:FireMotorGeneralTotalAccidentContingency1,875,0003,724,500824,0006,423,500Outstanding claims245,050423,150203,800872,000Unexpired risks1,872,0002,650,050898,0005,420,050Required:Prepare profit and loss account for the year ended 31 December 2008 and a balance sheetas at that date in a form suitable for publication.SUGGESTED SOLUTION 6NORTH-SOUTH ASSURANCE PLCPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2008NOTE₦’000₦’000Premium income159,011.95Commission income212,459.67Investment income4,356.50Other income311,497.4687,325.58Claims423,879.25Commission expenses54,221.50Management expenses630,828.05(58,928.80)Profit before taxation728,396.78Taxation(2,500)Profit after taxation25,896.78APPROPRIATIONS:Proposed dividend88,000Transfer to contingency reserve6,423.5
68(14,423.50)Retained profit transferred to general reserve11,473.28NORTH-SOUTH ASSURANCE PLCBALANCE SHEET AS AT 31 DECEMBER 2008ASSETSNOTE₦’000₦’000Cash and bank balances8,725.00Short-term investments915,000.00Debtors & prepayments106,537.67Loan to policy holders65,005.00Long-term investment1123,781.20Statutory deposit25,000.00Fixed assets129,500.00Total Assets(a)153,548.87LIABILITIESAmount due to agents6,683.24Taxation2,500.00Proposed dividend88,000.00Insurance funds1341,267.35(b)58,450.59NET ASSETS(ab)95,098.25CAPITAL AND RESERVECall-up share capital1480,000.00General reserve1515,098.2895,098.28NORTH-SOUTH ASSURANCE PLCNOTES TO THE FINANCIAL STATEMENTS1.Premium income:FireMotorGeneralTotalPremium receivable20,844,38034,855,89013,731,73069,432,000Re-insurance premium payable(1,492,540)(2,537,310)(970,150)(5,000,000)Transfer to unexpired risk(1,872,000)(2,650,050)(898,000)(5,420,050)17,479,84029,668,53011,863,58059,011,9502.Commission receivable2,624,7105,621,3804,213,58012,459,6703.Other income:Interest on loan granted6,258,840Sundry income5,238,62011,497,4604.Claims:Amount paid6,258,00010,257,0006,492,25023,007,250Transfer to outstanding claims245,050423,150203,800872,0006,503,05010,680,1506,696,05023,879,2505.Agents’ commission875,0002,316,0001,030,0004,221,5006.Management expenses:₦’000Provision for bad debts (7,641,3004,366,500)3.274.8Audit fees535Actuary consulting fees2,358
69Advertising & publicity2,500Entertainment900Vehicle running expenses1,850Legal & other professional fees3,475Electricity625Telephone & postages489Rents & postages2,356Salaries & wages5,487.25Transport & travelling1,625Staff pension1,658Repairs & renewals875Directors’ fees & expenses1,978Depreciation charge84230,828.057.PROFIT BEFORE TAX is stated after charging:

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Term
Summer
Professor
NoProfessor
Tags
Financial Accounting, Balance Sheet, Generally Accepted Accounting Principles, international Accounting standards Board, Interpretation of Financial Statements

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