Goods worth $1, 00,000 were burnt by fire and a claim of $60, 000 has been accepted by the insurance company. How it will be recorded in final accounts and give journal entries

Asked by malavikavimal88 | 29th Feb, 2020, 09:10: PM

Expert Answer:

Assuming that the value of goods lost by fire is Rs. 1,00,000. Insurance company paid a claim of Rs.60, 000.
Entries will be passed as follows:
Abnormal Loss A/c.   Dr.   1,00,000
     To Trading A/c                     1,00,000
Insurance Company A/c. Dr.  1,00,000
     To Abnormal Loss A/c.          1,00,000
Bank A/c.                        Dr. 60,000
Profit and Loss A/c       Dr. 40,000
     To Insurance Company A/c.     1,00,000

Answered by Surabhi Gawade | 1st Mar, 2020, 12:02: AM

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