Goods worth Rs. 5,000 destroyed by fire, insurance company paid 40%
amount only.
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Given:
Goods worth Rs. 5,000 destroyed by fire, insurance company paid 40% amount only.
To find:
The entries in the book of account.
Solution:
From given, we have the statement, "Goods worth Rs. 5,000 destroyed by fire, the insurance company paid 40% amount only."
The entries in the book of account are to be done as follows.
To Purchase A/c Rs. 5000
The loss by fire 60/100 × 5000 = Rs. 3000
The insurance Co. A/c Dr. 40/100 × 5000 = Rs. 2000
To Purchase A/c Rs. 5000
The loss by fire Rs. 3000
The insurance Co. A/c Dr. Rs. 2000
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