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Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries?
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Purchase goods of G 20,000, out of these goods amounting to G 14,000 i...
Journal Entries for Goods Purchase and Insurance Claim
1. Purchase of Goods:
Date Account Title Debit Credit
- Goods 20,000
- Cash/Bank 20,000
Explanation:
The purchase of goods is recorded by debiting the Goods account, which represents the increase in the value of inventory. The corresponding credit is given to the Cash/Bank account, representing the cash outflow for the purchase.
2. Insurance Coverage for Goods:
Date Account Title Debit Credit
- Insurance Expense 14,000
- Insurance Payable 14,000
Explanation:
The insurance coverage for the goods is recorded as an expense in the Insurance Expense account. The corresponding credit is given to the Insurance Payable account, representing the liability to the insurance company.
3. Loss by Fire:
Date Account Title Debit Credit
- Insurance Payable 2,500
- Loss by Fire 2,500
Explanation:
The loss by fire is recorded by debiting the Insurance Payable account, which reduces the liability to the insurance company. The corresponding credit is given to the Loss by Fire account, representing the decrease in the value of the goods due to the fire.
4. Insurance Claim Settlement:
Date Account Title Debit Credit
- Insurance Payable 2,500
- Cash/Bank 2,500
Explanation:
The insurance claim settlement is recorded by debiting the Insurance Payable account, which reduces the liability to the insurance company. The corresponding credit is given to the Cash/Bank account, representing the cash inflow received from the insurance company.
Explanation of the Journal Entries:
1. Purchase of Goods:
- The purchase of goods is recorded to reflect the increase in inventory and decrease in cash/bank.
- The Goods account is debited to represent the increase in the value of inventory.
- The Cash/Bank account is credited to show the cash outflow for the purchase.
2. Insurance Coverage for Goods:
- The insurance coverage for the goods is recorded as an expense and a liability.
- The Insurance Expense account is debited to recognize the cost of insurance coverage.
- The Insurance Payable account is credited to reflect the liability to the insurance company.
3. Loss by Fire:
- The loss by fire reduces the value of the insured goods and decreases the liability to the insurance company.
- The Insurance Payable account is debited to reduce the liability to the insurance company.
- The Loss by Fire account is credited to represent the decrease in the value of the goods.
4. Insurance Claim Settlement:
- The insurance claim settlement results in a decrease in the liability and an increase in cash/bank.
- The Insurance Payable account is debited to reduce the liability to the insurance company.
- The Cash/Bank account is credited to reflect the cash inflow received from the insurance company.
These journal entries accurately record the purchase of goods, insurance coverage, loss by fire, and the subsequent insurance claim settlement.
1. Purchase of Goods:
Date Account Title Debit Credit
- Goods 20,000
- Cash/Bank 20,000
Explanation:
The purchase of goods is recorded by debiting the Goods account, which represents the increase in the value of inventory. The corresponding credit is given to the Cash/Bank account, representing the cash outflow for the purchase.
2. Insurance Coverage for Goods:
Date Account Title Debit Credit
- Insurance Expense 14,000
- Insurance Payable 14,000
Explanation:
The insurance coverage for the goods is recorded as an expense in the Insurance Expense account. The corresponding credit is given to the Insurance Payable account, representing the liability to the insurance company.
3. Loss by Fire:
Date Account Title Debit Credit
- Insurance Payable 2,500
- Loss by Fire 2,500
Explanation:
The loss by fire is recorded by debiting the Insurance Payable account, which reduces the liability to the insurance company. The corresponding credit is given to the Loss by Fire account, representing the decrease in the value of the goods due to the fire.
4. Insurance Claim Settlement:
Date Account Title Debit Credit
- Insurance Payable 2,500
- Cash/Bank 2,500
Explanation:
The insurance claim settlement is recorded by debiting the Insurance Payable account, which reduces the liability to the insurance company. The corresponding credit is given to the Cash/Bank account, representing the cash inflow received from the insurance company.
Explanation of the Journal Entries:
1. Purchase of Goods:
- The purchase of goods is recorded to reflect the increase in inventory and decrease in cash/bank.
- The Goods account is debited to represent the increase in the value of inventory.
- The Cash/Bank account is credited to show the cash outflow for the purchase.
2. Insurance Coverage for Goods:
- The insurance coverage for the goods is recorded as an expense and a liability.
- The Insurance Expense account is debited to recognize the cost of insurance coverage.
- The Insurance Payable account is credited to reflect the liability to the insurance company.
3. Loss by Fire:
- The loss by fire reduces the value of the insured goods and decreases the liability to the insurance company.
- The Insurance Payable account is debited to reduce the liability to the insurance company.
- The Loss by Fire account is credited to represent the decrease in the value of the goods.
4. Insurance Claim Settlement:
- The insurance claim settlement results in a decrease in the liability and an increase in cash/bank.
- The Insurance Payable account is debited to reduce the liability to the insurance company.
- The Cash/Bank account is credited to reflect the cash inflow received from the insurance company.
These journal entries accurately record the purchase of goods, insurance coverage, loss by fire, and the subsequent insurance claim settlement.
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Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries?
Question Description
Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries?.
Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries?.
Solutions for Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries? in English & in Hindi are available as part of our courses for Commerce.
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Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries?, a detailed solution for Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries? has been provided alongside types of Purchase goods of G 20,000, out of these goods amounting to G 14,000 is insured. Goods amounting to G 3,000 is burnt by fire out of the insured goods, but the loss is only G 2,500. Insurance company accepted this claim and made the payment. Pass necessary journal entries? theory, EduRev gives you an
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