LaBelle Corporation owns a $5.9 million whole life insurance policy on the life

Question

LaBelle Corporation owns a $5.9 million whole life insurance policy on the life of its CEO, naming LaBelle as beneficiary. The annual premiums are $94,900 and are payable at the beginning of each year. The cash surrender value of the policy was $55,800 at the beginning of 2016. Required: 1. Prepare the appropriate 2016 journal entry to record insurance expense and the increase in the investment, assuming the cash surrender value of the policy increased according to the contract to $69,900. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

1. Journal entry in 2016

Account titles debit Credit Insurance expense (difference) 80800 Cash surrender value of life insurance(69900-55800) 14100 Cash 94900

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