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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)
