why the (premium receivable at the beginning) deducted and (premium receivable at the end) added?...
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Accounting
why the (premium receivable at the beginning) deducted and (premium receivable at the end) added?
Exercise 1: From the following prepare schedule -1 premium earned on 31 March 2004 premium received 120000 premium receivables at the beginning 10000 premium receivable at the end 15000 premium on reinsurance accepted 5000 premium on reinsurance ceded 2000 reserve for unexpired risk at the beginning 50000 Solution: Schedule 1: Premiums earned net Premium received 120000 + premium receivable at the end 15000 -premium receivable at the beginning 10000 ? +premium on reinsurance accepted 5000 -premium on reinsurance ceded 2000 Total 128000 Reserve for unexpired risk 50% of premium Income 128000 x 50/100 = 64000 Less reserve on-1-4-2003= (50000) (14000) Total 114000
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