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accounting effect for closing stock goods destroyed by fire
and claim is given by insurance co
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Answer / mathew
The answer is as follows :
Abnormal loss ...............Dr
To Trading a/c
Cash a/c..............Dr
To Insurance Co
(assuming that the Insurance co has accepted the claim of the firm and has fully remitted the value of stock destroyed, since the question states the claim has been given by the Insurance co)
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Answer / shameemudheen
DR Inventory loss by Fire - Expenses
CR Inventory - Asset
(Inventory loss noted due to fire)
DR Cash - Asset
CR Insurance company - Assets
(Claim amount received from insurance company)
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Answer / alok
In this question it is not clear whether the co. gets the
claim or not. it only says that claim is given.
since no claim money is received yet, it should be under
conservative convention treated as loss and respective entry
needs to made. i.e.
Loss by fine a/c Dr
to purchase
and loss by fire account should be Debited in Trading Account.
If the question gives a clue that claim money is received
then it should be treated as
Bank account Dr
Loss by fir a/c Dr (uncovered part)
to purchase
(appropriate narration should be made here)
| Is This Answer Correct ? | 1 Yes | 7 No |
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