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What is the journal entry on Dec

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Question - On Jan. 1, 2010, ABC entered into an insurance contract covering the life of its founder. The $100,000 annual insurance premium is payable at the start of the year. By the end of the fifth year, the insurance will have a cash surrender value and it was as follows for the following years:

Year

Cash Surrender Value

2014

80,000

2015

100,000

2016

130,000

2017

180,000

Required -

1. What is the journal entry on Dec. 31, 2014 to recognized the cash surrender value and adjust the related accounts? Parenthetical solutions would suffice.

2. If the founder died on Mar 31, 2017, what is the journal entry to update the cash surrender value on the said date?

3. Continuing from the previous number and assuming further that $3,000,000 was received from the insurance, what is the journal entry to record the gain on settlement and make the final adjustment to the insurance expense?

Reference no: EM132913553

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