An employee stole away cash rs.2000 and goods worth 1000.what is the journal entry
Answers
Q: What is the journal entry for the claim recovered from fire insurance?
A: This depends on the exact asset/s that were destroyed in the fire and to what extent they were covered. Let's take three examples.
1) Let's say a storeroom and its contents, valued at $60,000, were destroyed by fire. The insurer pays your business $60,000.
In this case the entry would be:
Dr Insurer (debtor) $60,000
Cr Storeroom (asset) $60,000
And later:
Dr Bank $60,000
Cr Insurer (debtor) $60,000
2) Now let's say the agreed amount of the claim was $50,000 instead of $60,000.
The journal entry would be:
Dr Insurer (debtor) $50,000
Dr Loss $10,000
Cr Storeroom (asset) $60,000
And later:
Dr Bank $50,000
Cr Insurer (debtor) $50,000
In this second scenario we record the loss (the difference between the value of the asset lost and the amount of the claim) of $10,000.
For asset/s that were destroyed that were subject to depreciation, one would take out the accumulated depreciation account too.
3) A delivery vehicle, which had a cost of $10,000 and accumulated depreciation of $3,000, was destroyed by fire. The insurance claim amounted to $5,000.
The entries would be:
Dr Insurer (debtor) $5,000
Dr Accumulated depreciation $3,000
Dr Loss $2,000
Cr Delivery vehicle (asset) $10,000