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How to record insurance claim received less than the actaul loss in trading a/c ,profit and loss a/c and balance sheet?

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Question added by shubham harit
Date Posted: 2016/02/24
faheem faheem ali
by faheem faheem ali , Accountant , Afzal International Pvt

if you insurance claimed received is less than the actual loss then (lets suppose insurance claimed is for stock) 

1))   first of all the whole amount of sock will be credited to trading a/c 

2)) then the difference between the actual loss and amount admitted by the insurance company will the debited to in profit & loss a/c 

3)) then if the amount claimed is received by the company then it will be added in bank account at asset side and if it is receivable yet then recorded as insurance receivable  in asset side.

lets take an example stock is lost by fire is 5000 and insurance claimed is 4000. then first of all 5000 will b recorded on credit side of the trading a/c. the general entry will be as

stock lost by fire          5000

     stock account                    5000

then the difference between the actual lost and insurance claim will be debited to the profit and loss account (5000-4000=1000). the general entry will be as

insurer company         4000

profit & loss a/c            1000

            stock lost by fire           5000

when insurance received

bank account               4000

         insurer company          4000

then this insurance will be treated as asset if receivable or bank account in asset side if received (4000)

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