Asked by Anamari Kolak on May 16, 2024
Verified
William, Inc.purchased a $400, 000 life insurance policy on the company president on January 1, 2010.The premium that was paid on January 1 amounted to $11, 600.In the first year, cash surrender value increased by $900 and dividends received by William from the insurance company for the year amounted to $300.What was William's insurance expense for 2010?
A) $10, 400
B) $11, 000
C) $12, 500
D) $12, 800
Cash Surrender Value
The amount of money an insurance company will pay to a policyholder if their policy is voluntarily terminated before its maturity or an insured event occurs.
Insurance Expense
The cost incurred by an entity to obtain insurance coverage for various risks.
Premium
The amount by which the price of a bond or security exceeds its principal amount or face value.
- Distinguish and categorize diverse investment forms.
Verified Answer
KO
KAYLEY OSBORNEMay 22, 2024
Final Answer :
A
Explanation :
The insurance expense for William, Inc. for 2010 is calculated by taking the premium paid ($11,600) and subtracting both the increase in cash surrender value ($900) and the dividends received ($300). Thus, the insurance expense is $11,600 - $900 - $300 = $10,400.
Learning Objectives
- Distinguish and categorize diverse investment forms.