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.
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
