Question

Good costing Rs 1000 damaged by fire and insurance company accepted claim of Rs 800 and cheque is received from the insurance company with CGST and SGST of @ 9 % each ​

Answer 1

Answer:

Loss by fire A/c    Dr   1000

      To Purchases A/c               1000

(Being goods lost by fire)

Purchases A/c     Dr      800

Input CGST A/c   Dr         72

Input SGST A/c    Dr        72

        To Bank A/c                    944

(Being claim accepted and paid by insurance company with cgst and igst)

Explanation:

Whenever any loss is incurred by fire then the same account is opened to record the loss. Loss by fire A/c is an expense to business and thus it is debited with the amount of loss.

Crediting purchase account in the same case is needed because it is the purchased goods that is lost and thus the total amount is reduced from it. When the claim is accepted by insurance company the amount reimbursed is to be entered into books. Since payment is made by cheque thus bank account will receive the amount.