Assignment on Insurance Business

Trial Balance of Deon Insurance Company Limited as at 31st December 2019
	Debit	Credit
Claims paid	8,834,289
Commissions paid	142,583
Interest paid	4,000,000
Staff cost	29,053,167
Audit fees	130,767
Other income- Interest on investment		2,666,667
Reinsurance claims recovered		2,466,667
Stated capital		15,533,335
Capital surplus		9,588,327
Income surplus		3,919,560
Contingency reserve		6,441,634
Building	12,916,647
Motor vehicle	5,332,255
Equipment and furniture	9,042,985
Acc. Dep: Building		2,287,357
Acc. Dep: Motor vehicle		3,364,404
Acc. Dep: Equipment and furniture		1,102,471
Gross premium		90,740,819
10% Debenture		70,000,000
Premium returned and cancelled	10,000,000
Reinsurance premium paid	27,603,132
Intangible assets	35,797,721
Investment properties	34,295,050
Receivables	12,121,312
Prepayment	10,705,063
Unexpired risk reserve		9,817,443
Cash and bank	23,005,933
Outstanding claims payable		5,052,220
	222,980,904	222,980,904

Additional Information

• Audit fees accrued for the year ended 31^st Dec 2019 was $1,520.
• The company pays interest on 10% debenture semi-annual.
• Unexpired reserve risk is calculated at 25%
• Assume corporate tax is 25%
• Depreciation is to be accounted for on the following basis:

Buildings 5% Straight line method

Motor vehicles 20% Reducing balance method

Equipment and furniture 10% Straight line method

• In compliance with the Insurance Act (Act 724), 20% of net profit after tax is to be transferred to the contingency reserve.

Required:

Prepare the following financial statements of Deon Insurance Limited for publication in accordance with relevant legislation:

1. Prepare the Statement of Comprehensive Income for the year ended 31^st December, 2019
2. Prepare the Statement of Changes in Equity for the ended 31^st December, 2019
3. Prepare the Statement of Financial Position as at 31^st December, 2019.