Loss of Stock due to fire

Aamir Abbas · #1 Jun 18, 2008, 04:41 AM

on December 20th a fire breaks out in the factory and destroys stocks valued at 10,000. The insurance company admits the claim for loss of stock to the value of 6,000 only, which will be paid after the year end (December 31st).
Can anyone please help me out with the Journal Entry for this on the year end and explain the treatments of the relevant Debit and Credits in the entry as to their reporting in the financial statements?????

manik chand dey · Jun 20, 2008, 10:39 PM

Insurance claim receivable a/c DR 6,000
loss by fire a/c DR 4,000
To Purchase a/c 10,000

Insurance claim receivable a/c will be shown as an asset in the Balance sheet.
Loss by fire a/c will be debited in Profit and loss a/c.



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