question archive Question One The following balances were extracted from the books of Ulinzi Insurance Company Ltd
Question One The following balances were extracted from the books of Ulinzi Insurance Company Ltd
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Question One
The following balances were extracted from the books of Ulinzi Insurance Company Ltd. As at
31st March 2020:
Debits Sh.
Expenses of management:
Fire
Marine
Claims paid:
Fire
Marine
Commission:
Fire
Marine
Directors' fees
Depreciation on furniture
Contribution to NSSF
Investments
Debentures on mortgage bank
Interest accrued
Shares in companies
Premiums outstanding:
Fire
Marine
Sundry debtors
Fixed deposits
Cash and bank balances
Furniture less depreciation
Library books
Credits
Reserve for unexpired risks:
Marine
Fire
Premium less reinsurance:
Fire
Marine
Additional reserves:
Fire
Marine
Claims outstanding on 1st April 2019:
Fire
Marine
Interest on investments
Miscellaneous receipts
Share capital:
579,000
258,000
840,000
805,500
522,000
370,500
130,500
6,000
22,500
18,886,500
4,402,500
54,000
4,230,000
1,056,000
894,000
289,5000
213,000
981,000
48,000
15,000
Sh.
1,830,000
976,500
2,479,500
1,677,000
1,071,000
112,500
28,500
1,500
385,500
1,500
210,000 ordinary shares Sh.100 each
General reserve
Staff provident fund
Sundry creditors
Contingency reserve
Investment fluctuation reserve
21,000,000
1,917,000
213,000
900,000
300,000
210,000
The following additional information is available:
1. Estimated liability in respect of claims outstanding at the close of the year was as
follows:
Fire Sh.39,000 Marine Sh.141,000
2. The following provisions are to be made:
(i) Sh.150,000 survey expenses for marine insurance claims
(ii) Sh.300,000 for taxation
2. An additional reserve of 10% of the net premium was made for the unexpired
risks in the case of fire insurance in addition to the balance brought forward.
3. In respect of fire insurance, a reinsurance premium paid Sh.450,000, a claim of
Sh.150,000 covered by insurance and a commission at 5% on reinsurance ceded
have still to be accounted for.
4. The market value of the investments is Sh.21,375,000.
5. The reserve for unexpired risk should be 100% of the premium less reinsurance in
marine business.
Required:
The revenue accounts and Income statement for the year ended 31st March 2020 and Statem
