Question

Goods worth Rs. 300 were spoilt in transit and a claim was made to the Railway Co., in this respect.​

Answer 1

Journal Entry of Loss of goods by Transit :

Loss by Transit A/c_Dr (50,000)

To Purchases A/c (50,000)

(Being goods were damaged in transit a claim was made on railway authorities for the same)

Reason : Loss by Transit Account is debited because it increases the balance of Loss by Transit(Losses Account) Account and Purchases Account is credited because it decreases the balance of Purchases(Expenses) Account.

Journal Entry of a claim received from Railway Authorities :

Bank A/c_Dr (45,000)

Profit and Loss A/c_Dr (5,000)

To Loss by Transit A/c (50,000)

(Being a cheque received from Railway Authorities after fifteen days in full settlement of claim)Reason : Bank Account is debited because it increases the balance of Bank(Assets) Account, Profit and Loss Account is debited because it increases the balance of Profit and Loss(Losses) Account, Loss by Transit Account is credited because it decreases the balance of Loss by Transit(Losses) Account.

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Answer 2

Answer:

loss in transit account dr

to purchase ac

railway company ac dr

to loss in transit ac

cash account dr

to railway account