Insurance claim

Dear Purva,

The former answer is only correct. Hear we are calculating gross profit for the insurance claim so gross profit should be normal gross profit before abnormal situation. Since goods stolen are abonormal incident and free samples are also not repeatative we have to add sales value of those to the sales.

One more method which is very complicated and require information lot of information is, instead of adding those to the sales value, we can deduct the value of purchase of free samples and goods stolen, value of direct expenses on those stocks. (And some adjustments according to FIFO/weighted average method)

So in a simple way its better to add them to sales and obtain normal gross profit.