Question

What will be the journal entry of Goods lost by fire. ₹400.

Answer 1

Hey,

The journal entry for your transaction will be..

Loss by fire account..Dr. 400
To purchase account 400
(being goods loss by fire )

hope it helps.

☺️☺️☺️☺️

Answer 2

Here is the journal entry of Goods lost by fire. ₹400

Loss by fire ( Rs 400) reducing our purchases of goods,
entry will be:

Loss by fire a/c Dr. 400 (debit the exp)
To Purchase a/c 400

Now, this loss needs to be set off in P&L:

P&L a/c Dr. 400 
to Loss by fire a/c 400

In case, there is insurance company pays Rs. 200,
then entry would be:

Cash a/c Dr. 200 
To Ins. comp a/c 200

Now, Insurance comp. accounts need to be set off against P&L and this would show up in credit side of P&L account.

Insurance comp a/c Dr. 200
To P&L a/c 200


So, the ultimate loss was Rs.200 (400-200)