What is the journal entry for loss of goods by theft
Answers
Answer :
Loss by theft A/c . . . Dr - Amount
To purchase A/c - Amount
( Being loss of goods by theft )
Explanation :
According to the traditional method of debit and credit, all the losses and expenses are debited. So, here we have debited the loss by theft A/c.
Since the goods are recorded at their purchased price, we have credited purchases as there is a loss of goods ( or we can say that purchases are decreased ).
ANSWER :
❖ The journal entry for Loss of Goods by theft is :-
Or,
___________________________________________________________
EXPLANATION :
Sometimes, the goods and assets of the business may be destroyed or damaged due to certain abnormal causes which are beyond the control of the business such as flood, fire, earthquake, accident etc. On account of such damage, the business suffers loss, that is called Abnormal Loss.
When goods are lossed due to abnormal reasons; then the respective Abnormal Loss Account is debited and Purchases Account or Trading Account is credited.
- ✠ Loss of Goods by theft is an abnormal loss. Therefore, Goods Lost by Theft A/C is debited and Purchases A/C is credited. However, sometimes Trading A/C is also used in the place of Purchases A/C. Then, Goods Lost by Theft A/C is debited and Trading A/C is credited.