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The following trial balance was extracted from the books of Bima Insurance Ltd. as at 30 June 2006.
Sh.'000'
Net earned premiums:
Fire
139,668
Motor
259,456
Net commissions:
3,466
6,938
Net earned paid:
55,784
111,562
Net claims outstanding as at 1 July 2005:
72,036
144,074
Management expenses to be charged to revenue accounts
155,108
Management expenses not to be charged to revenue accounts
20,000
Bad debts
5,000
Treasury bills
199,100
Treasury bonds
11,386
Deposits in banks
474,100
Motor vehicles (net book value-1 July 2005)
1,000
Equipment (Net book value - 1 July 2005)
14,414
Amounts due to other insurance companies
4,000
Amounts due from other insurance companies
6,940
Bank overdraft
16,000
Share capital
120,000
Investment income
72,000
Other income
17,564
Revaluation reserves
50,000
Retained earnings as at 1 July 2005
30,000
Unearned premium reserves as at 1 July 2005:
40,000
100,00
1,064,798
Additional information:
1. Management expenses are to be apportioned to revenue accounts on the basis of net earned premiums.
2. The management made the following estimates as at 30 June 2006:
Net claims outstanding: Fire 90,000
Motor 158,000
3. Reserve for unexpired risks as at 30 June 2006 is to be maintained at 50% of the respective net earned premiums for both the fire and motor businesses.
4. Depreciation on motor vehicles and equipment is to be provided using the reducing balance method at the rates of 20% and 10% per annum respectively.
Required:
(i) Revenue accounts for the year ended 30 June 2006.
(ii) Profit and loss account for the year ended e0 June 2006.
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