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Goods destroyed by fire 2000₹ and insurance company admitted a claim of ₹1500 and scrap value realized of 200
pass necessary journal entries?
pass necessary journal entries?
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Goods destroyed by fire 2000₹ and insurance company admitted a claim o...
Journal Entries for Goods Destroyed by Fire
In this scenario, we need to account for the loss of goods due to fire, the insurance claim admitted, and the scrap value realized from the damaged goods. Below are the necessary journal entries:
1. Record the Loss of Goods
- Loss of goods due to fire is recorded as a loss expense.
Journal Entry:
- Loss by Fire Account Dr. ₹2000
- To Goods Account Cr. ₹2000
2. Record the Insurance Claim Received
- When the insurance company admits the claim, it is recorded as a receivable until received.
Journal Entry:
- Insurance Claim Account Dr. ₹1500
- To Loss by Fire Account Cr. ₹1500
3. Record the Scrap Value Realized
- The scrap value received from the damaged goods is recorded as income.
Journal Entry:
- Cash/Bank Account Dr. ₹200
- To Scrap Value Account Cr. ₹200
4. Final Summary of Transactions
- The total loss from the fire amounts to ₹2000.
- The insurance claim received reduces the loss by ₹1500.
- The scrap value contributes an additional ₹200.
Conclusion
- These journal entries ensure that all financial impacts of the fire incident are accurately recorded.
- The loss, insurance claim, and scrap value are clearly reflected in the accounts.
This systematic approach helps maintain transparency and clarity in financial reporting, important for both internal management and external stakeholders.
In this scenario, we need to account for the loss of goods due to fire, the insurance claim admitted, and the scrap value realized from the damaged goods. Below are the necessary journal entries:
1. Record the Loss of Goods
- Loss of goods due to fire is recorded as a loss expense.
Journal Entry:
- Loss by Fire Account Dr. ₹2000
- To Goods Account Cr. ₹2000
2. Record the Insurance Claim Received
- When the insurance company admits the claim, it is recorded as a receivable until received.
Journal Entry:
- Insurance Claim Account Dr. ₹1500
- To Loss by Fire Account Cr. ₹1500
3. Record the Scrap Value Realized
- The scrap value received from the damaged goods is recorded as income.
Journal Entry:
- Cash/Bank Account Dr. ₹200
- To Scrap Value Account Cr. ₹200
4. Final Summary of Transactions
- The total loss from the fire amounts to ₹2000.
- The insurance claim received reduces the loss by ₹1500.
- The scrap value contributes an additional ₹200.
Conclusion
- These journal entries ensure that all financial impacts of the fire incident are accurately recorded.
- The loss, insurance claim, and scrap value are clearly reflected in the accounts.
This systematic approach helps maintain transparency and clarity in financial reporting, important for both internal management and external stakeholders.
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Question Description
Goods destroyed by fire 2000₹ and insurance company admitted a claim of ₹1500 and scrap value realized of 200 pass necessary journal entries? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Goods destroyed by fire 2000₹ and insurance company admitted a claim of ₹1500 and scrap value realized of 200 pass necessary journal entries? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Goods destroyed by fire 2000₹ and insurance company admitted a claim of ₹1500 and scrap value realized of 200 pass necessary journal entries?.
Goods destroyed by fire 2000₹ and insurance company admitted a claim of ₹1500 and scrap value realized of 200 pass necessary journal entries? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Goods destroyed by fire 2000₹ and insurance company admitted a claim of ₹1500 and scrap value realized of 200 pass necessary journal entries? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Goods destroyed by fire 2000₹ and insurance company admitted a claim of ₹1500 and scrap value realized of 200 pass necessary journal entries?.
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