Question

good worth 5000 were destroyed​

Answer 1

question:

good worth 5000 were destroyed?

Answer:

Goods worth ₹5000 destroyed by fire and insurance company admitted claim for ₹4000 only.

The journal entry would be as follows :

Loss by fire a/c……dr ₹1000

Insurance claim receivable a/c…….dr ₹4000

To goods destroyed by fire a/c ₹5000

Loss by fire is a loss and nominal a/c so DEBITED

Insurance claim receivable is asset so DEBITED

Goods destroyed by fire is credited because the goods which we bought for sale were included in purchases and no more benefit can be achieved from that destroyed goods and moreover the goods are gone out of business so CREDITED.

Journal entry when insurance claim will be received :

Cash / Bank a/c……..dr ₹4000

Insurance claim receivable a/c ₹4000

Cash comes in and is real a/c so DEBITED.

OR

Bank is personal a/c and receiver so DEBITED

Insurance claim receivable was debited in the above transaction as it was asset but now when claim is received the asset is cancelled so CREDITEd