University of the Autonomous Regions of the Caribbean Coast URACCAN

EXERCISE GUIDE

Subject: Banking Accounting November 9, 2019

UNIT V: Preparation of financial statements for insurance entities.
Contents: Practical class.

Objectives:
Apply the procedures correctly to register operations of
insurance.
Prepare the financial statements of an insurance entity in accordance with the
financial reporting standards and current legislation.
Activities: Solve the following cases.
1. The company SERJAM, S.A. took out insurance for its building worth
from $15,000.00 for a period of 15 months starting from February 2018.
Consider that since the moment the policy was signed, no action has been taken
adjust the insurance account. Record the journal entry for the acquisition
of the insurance and adjustment corresponding to December 31, 2018.

2. The company JUNMAR has suffered a fire in its warehouse causing a

loss of finished goods amounting to
C$10,200.00 and another building material of C$4,500.00. The expert of the
The insurance company MANHUD has evaluated at C$8,000.00 and C$3,000.00 the
Losses suffered in merchandise and building materials. Perform:
a) The record of the loss due to the occurred event.
b) The payment of the compensation received.
Record of payment of compensation by the insurer.

3. The investor Luis Ordoñez has secured his business for the amount of
C$580,000.00, the actual value of the insured property is C$700,000.00 and the
The established co-insurance is 15% on the losses. Considering that
this business suffers a loss of C$300,000.00, determine how much it owes
indemnify the insured company.

4. Mrs. Amanda Solís entered into an insurance contract considering a sum

insured for $50,000.00 where the established rate is 25 per thousand.
Calculate the total premium.

5. The insurance company HUDMAN presents the following initial balances:

Bank C$75,000,000.00
Building C$ 2,500,000.00
Premium to be collected C$ 1,500,000.00
Social Capital C$79,000,000.00
 Mr. Erick Olivas bought an insurance policy for his car.
The value of the insurance is $45,000.00 and the rate for the net premium
applicable is 26 per thousand. Its emission percentage being 2%
Calculate the total premium and record the accounting operation. With a rate of
exchange C$ 23 per 1 dollar.
If, after five months, Mr. Olivas had an incident, being estimated
the repair costs at $3,000.00 which were paid in cash.
Record this accounting operation
Account for the amount of $75,000.00 as depreciation for
real estate.
The insurance company acquired bonds from the central government for the
a sum of $650,000.00 which was paid by check.
Individual life insurance policy for sale with a value of $25,000.
The established rate is 15 per thousand. Calculate the premium and record it.
accounting operation taking into account VAT.
Account for the bank deposit as interest earned
for investments held until maturity. Amount of $7,200.00
Account for the expenses paid by check for the concept of
commissions on individual life insurance sales of $42,000 and
the expenses paid for training the agents for $28,000
Customers deposit in cash the amount of $65,000 for receipts of
premiums to be collected from group life insurance.
Register $ 55,000.00 as pending commissions to be paid to the
sales agents.

With the previously provided data, you are asked to:

a) Make the accounting entries
b) Transfer to larger schemes
Trial balance
d) Income statement and balance sheet
Exercise 6.
With the following data, prepare the E/R and Balance Sheet.
Insurance Company TANSER S.A as of June 30, 2018
Investments at fair value with changes in results 25,000.00
Investments available for sale 55,000.00
Investments held to maturity 22,000.00
Operations with values and derivatives 15,000.00
Lands 153,500.00
Buildings 120,000.00
Depreciation of building -5,000.00
Furniture and equipment 5,000.00
Vehicle 50,000.00
Vehicle depreciation -7,000.00
Computer equipment 8,000.00
Assets leased under finance lease 12,000.0
Other goods for use 7,000.00
Unearned premium reserves 15,000.00
Mathematical reservations 7,500.00
Life insurance reserves with a single account of 6,500.00
investment
Reserves for pending claims and/or 6,500.00
payment
Reserves for pending obligations to be fulfilled due to occurring incidents
And not reported 7,500.00
Contingency reserves 15,000.00
Reserves for catastrophic risks 7,500.00
Funds reserves for rents and pensions 5,000.00
Reserves for pending contractual obligations of 6,000.00
payment
Loan with policy guarantee 55,000.00
Current credits 15,000.00
Extended credit 45,000.00
Restructured credits 5,000.00
Expired credits 7,000.00
Credits in judicial collection 5,000.00
Interest and commissions receivable 15,000.00
Receivables from premiums 25,000.00
Other debtors 15,000.00
Reinsurance and co-insurance institutions (net) 45,000.00
Permanent investments in stocks 55,000.00
Labor benefit investments 48,500.00
Other assets 55,000.00
Subscribed paid-up capital 100,000.00
Subscribed unpaid share capital 55,000.00
Treasury shares 45,000.00
Donated capital 40,000.00
Non-capitalizable equity contributions 5,800.00
Convertible bonds into capital 5,200.00
Adjustments to equity 5,000.00
Heritage reserves 25,000.00
Accumulated results from previous exercises 85,000.00
Results of the current exercise ?
Subordinated and/or convertible bonds into capital 40,000.00
Reserves for labor benefits 35,000.00
Various creditors 55,000.00
Other liabilities 27,500.00
Primers in deposit 25,000.00
Deposit in guarantee for issued bonds 7,000.00
Creditors for premiums to be refunded 8,000.00
Deposited cousins 25,000.00
Deposit as collateral for issued guarantees 7,000.00
Creditors for premiums to be refunded 8,000.00
Reinsurers and co-insurers 7,500.00
Loans payable 25,000.00
Operations with values and derivatives 35,000.00
Operations with derivative financial instruments 15,000.00

Data to prepare Statement of

Result
Issued bonds 1,000,000.00
Returns and cancellations 290,000.00
Assigned primas 15,000.00
Mathematics and investment account 50,000.00

Unaccrued bonus 60,000.00

Administrative expenses 6,000.00
Emission rights 75,000.00
Acquisition cost 15,000.00
Other acquisition expenses 25,000.00
Excess loss costs 35,000.00
Income from exchange rate 75,000.00
Expenses by exchange rate -135,000.00
Contingency reserve 85,000.00
catastrophic reserve 35,000.00
Accident rate and other contractual obligations 150,000.00
Accident rate recovered from the overflow. And real. Granted -75,000.00
Reinsurance recovered loss -15,000.00
proportional
Other products 15,000.00
Other expenses -8,000.00
Participation in the results of subsidiaries 5,000.00
Net financial products
On investments 25,000.00
For the sale of investments 16,914.28
For investment valuation 20,800.00
Other financial products 7,000.00
Commissions and share. From ceded reinsurance profits 60,000.00
Expenses for claims from previous periods -50,000.00
Income from claims of prior periods 65,000.00