The ledger of Perez Rental Agency on March 31 of the current year includes the selected accounts, shown below, before quarterly adjusting entries have been prepared. Debit Credit Prepaid Insurance $ 3,600 Supplies 2,800 Equipment 25,000 Accumulated Depreciation—Equipment $ 8,400 Notes Payable 20,000 Unearned Rent Revenue 10,200 Rent Revenue 60,000 Interest Expense 0 Salaries and Wages Expense 14,000 An analysis of the accounts shows the following. 1. The equipment depreciates $400 per month. 2. One-third of the unearned rent revenue was earned during the quarter. 3. Interest totaling $500 is accrued on the notes payable for the quarter. 4. Supplies on hand total $900. 5. Insurance expires at the rate of $200 per month.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.

Rhoda owns an electronics store that is burglarized during the current year. The burglars destroy the point-of-sale terminal and steal $330 from the cash drawer. The point-of-sale terminal was purchased for $7,580, and its adjusted basis is $3,670. The insurance adjuster estimates that the fair market value of a similar point-of-sale terminal is $6,010. The burglars also steal stereo equipment costing $4,040 that has a retail value of $7,185. In breaking into the store, the burglars break a large glass door that costs Rhoda $535 to replace. Rhoda's deductible loss if the insurance company reimburses her $4,790 is $_____________

An insurance company finds that 0.03% of the population dies of a certain disease each year. The company has insured 100,000 people against death from this disease. Compute the probability that the firm must pay off in three or more cases next year.

A. 0.6266

B. 0.5768

C. 0.4232

D. 0.9910

An automobile insurance company estimates the following loss probabilities for the next year on a $20,000 sports car:

Total Loss: .001

50% Loss: .01

20% Loss: .05

If the company charges $850 annual premium for this car, how much is the company's expected gain per policy?

My professor wants the answer in the table above (if possible). I am unsure on how to answer this.

An insurance company must make payments to a customer of $11 million in one year and $7 million in five years. The yield curve is flat at 6%.

a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase?

b. What must be the face value and market value of that zero-coupon bond?

You are offered an insurance policy that will pay you and your heirs $25,000 a year forever, with the first cash flow coming 40 years from today. The policy will cost you $130,000 today. If the interest rate is 4%, is this a good deal?

Python problem:

An insurance salesperson knows the following about a client:

• The year the client was born.
• The age the client wants to retire.
• The annual amount the client can contribute to an IRA.

The insurance agent wants to know the following:

• The number of years until the client retires.
• The number of years until the client is required to take Required Minimum Distributions.
• The balance of the IRA at the age the client wants to retire.
• The balance of the IRA at the age Required Minimum Distributions (RMD) are to be taken.
• The Required Minimum Distribution that must be taken.

The formula to calculate the balance of the IRA is:

    B = (((1 + r)n - 1) / r) * A

where:

• B is the balance
• r is the interest rate
• n is the number of years
• A is the annual amount

The formula to calculate the Required Minimum Distribution is:

    RMD = B / DP

where:

• RMD is the Required Minimum Distribution to be taken
• B is the balance
• DP is the Distribution Period

Assume the following:

• The client is younger than the age they want to retire.
• The age Required Minimum Distributions are to be taken is 70.
• The expected interest rate is 5%. (Note: 5% will be 0.05 in the formula above)
• The Distribution Period is 27.4

Instructions

Algorithm

Set required minimum distribution age equal to 70
Set expected interest rate equal to 0.05
Set distribution period equal to 27.4
set current year to 2020

Get user input for birth year
Get user input for the age the user would like to retire
Get user input annual contribution to IRA

Add birth year to retirement age and save as retirement year
Subtract current year from retirement year and save as years until retirement
Add birth year to the required minimum distribution age and save as year of required minimum distribution 
Subtract current year from year of required minimum distribution and save as years until required minimum distribution

To calculate the balance of the IRA for the user's retirement year do the following formula:    
    First find the sum of one plus expected interest rate. Then raise the total to the power of years until retirement.  
    Subtract this total by one
    Then divide your new total by expected interest rate
    last multiply your final number by annual contribution to IRA
Save this number from the formula above to balance at retirement age

To calculate the balance of the IRA for the users required minimum distribution age do following formula:
    first find the sum of one plus expected interest rate. Then raise the total to the power of the required minimum distribution age. 
    Subtract this total by one. 
    then divide your new total by expected interest rate
    last multiply your final number by annual contribution to IRA
Save this number from the formula above to balance at required minimum distribution age

Now to calculate the required minimum distribution that must be taken out.  
Complete the following formula 
    balance at required minimum distribution age divided by distribution period
Save this total from the formula above as required minimum distribution

display current year
display birth year
display retirement age
display annual contribution to IRA
display years until retirement
display years until required minimum distribution
display balance at retirement age
display balance at required minimum distribution age
display required minimum distribution

1. Amy Austin established an insurance agency on March 1 of the current year and completed the following transactions during March:

   1. Opened a business bank account with a deposit of $50,000 in exchange for common stock.
   2. Purchased supplies on account, $4,000.
   3. Paid creditors on account, $2,300.
   4. Received cash from fees earned on insurance commissions, $13,800.
   5. Paid rent on office and equipment for the month, $5,000.
   6. Paid automobile expenses for month, $1,150, and miscellaneous expenses, $300.
   7. Paid office salaries, $2,500.
   8. Determined that the cost of supplies on hand was $2,700; therefore, the cost of supplies used was $1,300.
   9. Billed insurance companies for sales commissions earned, $12,500.
   10. Paid dividends, $3,900.

   Required:

   1. Indicate the effect of each transaction and the balances after each transaction. For those boxes in which no entry is required, leave the box blank. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

   Assets

   =

   Liabilities

   +

   Stockholders' Equity

   Item

   Cash

   +

   Accounts Receivable

   +

   Supplies

   =

   Accounts Payable

   +

   Common Stock

   -

   Dividends

   +

   Fees Earned

   -

   Rent Expense

   -

   Salaries Expense

   -

   Supplies Expense

   -

   Auto Expense

   -

   Miscellaneous Expense

   Item

   a.

   a.

   b.

   b.

   Bal.

   Bal.

   c.

   c.

   Bal.

   Bal.

   d.

   d.

   Bal.

   Bal.

   e.

   e.

   Bal.

   Bal.

   f.

   f.

   Bal.

   Bal.

   g.

   g.

   Bal.

   Bal.

   h.

   h.

   Bal.

   Bal.

   i.

   i.

   Bal.

   Bal.

   j.

   j.

   Bal.

   Bal.

   2. Stockholders' equity is the right of stockholders' to the assets of the business. These rights are   by issuing common stock and revenues and   by dividends and expenses.

   3. Determine the net income for March.
   $

   4. How much did March’s transactions increase or decrease stockholders’ equity?
     by $

Check My Work

• Previous

An insurance company must make payments to a customer of $9 million in one year and $4 million in six years. The yield curve is flat at 7%.

a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.)

b. What must be the face value and market value of that zero-coupon bond?