There is one correction in this....That the trading account will be credited by 2 lacs and not 1.8 lacs.....Reason being that the stock costing 2 lacs should be reduced in trading account so as to reflect true gross profit.
While in the p& l a/c the net loss due to fire will be 1.8 lacs and 20k will be received in bank or cash.
In short,
The stock will get reduced by 2 lacs,
The net loss from the transaction would be 1.8 lacs,
The cash received out of sale of scrap would be 20k.
CAclubindia
