Question

Goods worth 35,00.000 were destroyed in a fire accident and a claim of 3 1,50,000 has
been accepted by the insurance company. How will it be recorded in final accounts? (1)​

Answer 1

$\bf ANSWER$

35,00,000 will go in trading a/c(credit) and balance sheet(asset)

35,000 will go in profit and loss a/c (debit)

Answer 2

Solution :-

• First, we will have to pâss journal entries.

Loss of goods by fire A/c Dr. 35,00,000

To Purchase A/c. 35,00,000

Bank A/c. Dr. 31,50,000

Loss of goods by fire A/c Dr. 35,000

To Insurance A/c. 35,00,000

Insurance A/c. Dr. 35,00,000

To Insurance A/c. 35,00,000

Now,

• The cost of goods destroyed by fire i.e 35,00,000 will go in credit side of trading A/c.

• Rs.35,000 loss of goods, i.e claim not admitted will go in debit side of profit and loss A/c.

• Rs.35,00,000 insurance claim will go in balance sheet of asset side.

________________________________