124 quadra corp insured its president on january 1 2017 with a 2 000 000 life insura 4313708

124 quadra corp insured its president on january 1 2017 with a 2 000 000 life insura 4313708

124.Quadra Corp. insured its president on January 1, 2017, with a $2,000,000 life insurance policy. The annual premium was $60,000 payable on January 1 of each year. Cash surrender values increased each year by 5% of the premium paid. Dividends received in the first year (2017) amounted to $2,000 and increased by 10% each year, accruable at year-end only.
Required:

a.

Compute insurance expense for 2018.

b.

Prepare journal entries for July 1, 2019, when the president died.

125.Texas Company has a $4,000,000, 8% bank loan from James Bank. On January 1, 2017, the bank loan has three years to maturity. Texas enters into a three-year interest rate swap with Black and White Investments with a $4 million notional amount. The agreement calls for Texas to receive a fixed interest rate of 8% and pay a variable rate based on LIBOR at the beginning of the year. Payments to Black and White are to be made for the net amount at each year-end. At the beginning of 2017, the LIBOR rate is 7.5%. The three-year fixed rate at the end of 2017 is 9%.

?

Required:

??Prepare the journal entries that Texas would make in 2017 relating to the bank loan and the derivative.

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