In January of the current calendar fiscal year, a company paid $36,000 for insurance coverage for the next three years. After the first ten months of the insurance policy have lapsed, all of the following are true except:

Question 24 options:

As of December 31, Plush has not recorded any insurance expense for the year. The only insurance policy it owns is the one purchased on July 10, a three year insurance policy for $72,000 starting on August 1st. Make a general journal entry.

An automotive insurance company is reviewing a customer's application for a one-year policy. Based on the customer's driving history and the insurance company's past experience, the company assumes that the probability of each payout for one year is as shown in the table provided. What is the expected payout for the insurance company?

The Yankel Corporation’s controller prepares adjusting entries only at the end of the fiscal year. The following adjusting entries were prepared on December 31, 2018:

Additional information:

The company borrowed $46,000 on June 30, 2018. Principal and interest are due on June 30, 2019. This note is the company’s only interest-bearing debt.

Insurance for the year on the company’s office buildings is $138,000. The insurance is paid in advance.

On August 31, 2018, Yankel lent money to a customer. The customer signed a note with principal and interest at 9% due in one year.

Required:
1. What is the interest rate on the company’s note payable?
2. The 2018 insurance payment was made at the beginning of which month?
3. How much did Yankel lend its customer on August 31?
  

On July 1, 2018, a two-year insurance premium on equipment in the amount of $792 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1. Give the adjusting journal entry required for each item at December 31, 2018.

Joanne was diagnosed with as terminally ill (with less than one year to live). She is covered by an insurance policy that will pay her $90,000 of face amount of a $200,000 insurance policy. Joanne contributed $20,000 to the policy. What is the amount of income she must report if she accepts the $90,000?

Ying-Ru is beginning her senior year of college soccer and is deciding whether or not to buy insurance in case she is injured. There is a 50% chance she will not be injured and a 50% chance she will be. If she is not injured, she will received a $400 contract to play professionally. If she is injured, she will receive a $100 contract to carry water bottles.

(b) Insurance policy A will pay Ying-Ru $300 if she gets injured, so that she will always have a total wealth of $400−p, where p is the price of the policy. What is the largest price $p that Ying-Ru would be willing to pay for this policy?

(c) Policy Boffers Ying-Ru the option of buying as many dollars of insurance as she would like, at the price of p= 2/3 for $1 of insurance. Let c_ni be Ying-Ru’s consumption when there is no injury and c₁ be her consumption when she is injured. Write Ying-Ru’s state-contingent budget constraint. (Write your answer as the equation of a line, with c_ni isolated on the left, written as a function of c_i.)

(e) If policy Bwere the the only option available, what would be the optimal amount of insurance for Ying-Ru to buy?(f) Which policy is better for Ying-Ru—policy B or policy A with   p= 160?

Losses follow a Poisson frequency distribution with a mean of 2 per year. The amount of a loss is 1,2, or 3 with each having a probability of 1/3. Loss amounts are independent of the number of losses and from each other. An insurance policy covers all losses in a year subject to an annual aggregate deductible of 2. Calculate the expected claim payments for this insurance policy.