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G.T.Nageshwar Rao (Officer - Finance)     24 March 2010

Accounting treatment for Fire Loss

Company Purchases 10,000 goods and 1000 of goods lost due to fire, then insurance company settles the issue with only 800...what will be accounting entries for this if it comes in Final Accounts Adjustments......



 7 Replies

Santhosh Poojary

Santhosh Poojary (SIEMPRE AHÍ PARA TI)     25 March 2010

1) ENTRY FOR LOSS

GOODS LOSS BY FIRE A/C DR                      1000

                    TO TRADING A/C                                                  1000

 

2) ENTRY FOR INSURACE CLAIM.

INSURACE CLAIM A/C DR                             800

P& L A/C   (LOSS)         DR                             200

                    TO GOODS LOSS BY FIRE A/C                          1000

 

3.ENTRY WHEN CLAIM RECEIVED BY THE INSURANCE COMPANY

 

CASH A/C DR                                                800

                  TO INSURANCE CLAIM A/C                                 800.

 

 

SACHIN KUMAR GARG

SACHIN KUMAR GARG (Final Student)     27 March 2010

Agree with SAN

Payal Gupta

Payal Gupta (article assistant)     04 April 2010

agree with san

Virendra Chauhan

Virendra Chauhan (Manager Accounts)     10 May 2017

So, What will be the Gross equation in this case...?,

As per my opiinion it should be Gross Profit=Sales+Closing Inventory-Opening Inventory - Purchase(Less Return)

 

1 Like
shahyar husain

shahyar husain   10 November 2020

What will be the journal entry for the loss of goods by fire?
daxita naskar

daxita naskar   26 December 2020

Loss of goods by fir a/c dr. to purchases a/c
Prachi Bansal

Prachi Bansal   06 January 2021

Loss by Fire A/c is Debited and Purchases A/c is credited. The goods destroyed by fire is a loss for the business and is considered in the Nominal Account. Hence according to the rules of Nominal Account, the expenses and losses are debited. Therefore the loss by fire is debited in the Journal Entry. 

Hope this answer helps!


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