Goods Damage and Gross profit Loss

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A business owner experienced significant stock damage due to heavy rain, leading to a substantial loss. The insurance company offered a low payout. The owner is seeking advice on how to record this loss in their accounts to avoid affecting gross profit, while also clarifying how the insurance claim affects net profit.

Sumit Arora

Sumit Arora (Querist)
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11 March 2020 Respected Sir,

Due to heavy rain, buileding poll down it effect huge stock has been damage. around 2000 Packet.Insurance company cover very less value. Please suggest to me how to pass the entry in books of account which not effect my Gross profit.
Please advise

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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22 May 2020 GP will be affected but you NET Profit will not be affected much as your Insurance Claim Amount will be credited to PL

Sumit Arora

Sumit Arora (Querist)
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20 June 2020 Sir,
Can you suggest the entry how to do
i have created the ledger insurance clain receivable under Current assets so its not included in my NP

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