The following trial balance was extracted from the books of Bima Insurance Ltd. as at 30 June 2006.
|
|
|
|
Sh.'000'
|
Sh.'000'
|
|
Net earned premiums:
|
Fire
|
|
|
139,668
|
|
|
Motor
|
|
|
259,456
|
|
Net commissions:
|
Fire
|
|
3,466
|
|
|
|
Motor
|
|
6,938
|
|
|
Net earned paid:
|
Fire
|
|
55,784
|
|
|
|
Motor
|
|
111,562
|
|
|
Net claims outstanding as at 1 July 2005:
|
Fire
|
|
|
72,036
|
|
|
Motor
|
|
|
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:
|
Fire
|
|
|
40,000
|
|
|
Motor
|
|
|
100,00
|
|
|
|
|
1,064,798
|
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:
Sh.'000'
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.