On 1/1/2019, the rebate on bills discounted account of bank sohar showed a credit balance of OMR 100,000. On 31/12/2019, the discount account showed a credit balance of OMR 1,500,000 before adjusting unexpired discount. The bills discounted outstanding on 31/12/2019 were OMR 20,000,000 with a maturity date of January 31/1/2020. They were discounted at 12% p.a.

Write adjustment entries and relevant ledger accounts to record these items and also show how these items will appear in the final accounts of the bank. (7 marks)

(b) AXA Insurance Corporation provides you with some of the data related to its life insurance policies:

Premium received during the year = OMR 70,000

Reinsurance premium paid = 10% of the total premium received this year

Bonus in reduction of premium = 5% of the total premium received this year

Outstanding premium at the year-end = OMR 2,500

Premium received in advance at the start = OMR 1,290

Required: You have been asked to calculate the amount of premium to be credited to revenue account this year.

(3 marks)