make journal entry Received compensation from Insurance Company
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This depends on the exact asset/s that were destroyed in the fire and to what extent they were covered. Let's take three examples.
1) Let's say a storeroom and its contents, valued at $60,000, were destroyed by fire. The insurer pays your business $60,000.
In this case the entry would be:
Dr Insurer (debtor) $60,000
Cr Storeroom (asset) $60,000
And later when the insurer makes the payment:
Dr Bank $60,000
Cr Insurer (debtor) $60,000
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