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......
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Accounting treatment for Fire Loss
Replies (7)
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.
Agree with SAN
agree with san
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)
What will be the journal entry for the loss of goods by fire?
Loss of goods by fir a/c dr.
to purchases a/c
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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