goods worth Rs. 10,000(purchase cost) damaged by fire and insurance company accepted claim of Rs.8,000 and cheque is received from the insurance company...... journalise the following:
Answers
Profit and Loss A/c Dr. 2000
To Purchase A/c or Trading A/c. 10000
Bank A/C Dr. 8000
Profit and Loss A/c Dr. 2000
To Purchase A/c or Trading A/c. 10000
Explanation:
In this particular question goods which are worth 10000 rupees have been damaged by fire and the insurance company accepted to claim but they only gave a cheque of 8000 rupees.
Here in this case we will debit card bank account due to the increase of 8000 rupees in our bank, we will transfer the rest two thousand rupees to profit and loss account as it is a loss due to the Fire therefore debiting it, and we will credit the purchase or trading account in order to complete the transaction.
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