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    Aamir Abbas's Avatar
    Aamir Abbas Posts: 1, Reputation: 1
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    #1

    Jun 18, 2008, 04:41 AM
    Loss of Stock due to fire
    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's Avatar
    manik chand dey Posts: 63, Reputation: 2
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    #2

    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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