A fire occurred at the premises of a trader on 31.05.94 destroying a great part of his goods his stock at 1.1.94 was rs 60.000 the value of stock salvaged was rs 13.500 the gross profit and sales was 30 and sales amounted to rs 1.53000 from January to date of fire while for the same period the purchases amounted to rs 103.500 prepare a statement of claim
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The value of stock on hand on the date of fire, therefore, has to be estimated. This is done by ascertaining the cost of goods sold (sales minus the gross profit at the usual rate) and then deducting it from the total of opening stock, purchases, wages and other manufacturing expenses.
Explanation:
What is memorandum trading account prepared?
Memorandum Trading Account (for Current Year)
In case of fire, Memorandum Trading account is required to find the value of estimated Stock. It is prepared with the help of Gross Profit ratio of the last year, Opening Stock, Purchase, Sale, and Direct Expenses.
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