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......
G.T.Nageshwar Rao (Officer - Finance) (24 Points)
24 March 2010Company 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......
Santhosh Poojary
(SIEMPRE AHÍ PARA TI)
(15607 Points)
Replied 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.
Virendra Chauhan
(Manager Accounts)
(121 Points)
Replied 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)
shahyar husain
(1235 Points)
Replied 10 November 2020
Prachi Bansal
(3124 Points)
Replied 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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