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Solution : practical problem 1
Memorandum trading account
particulars Amount particulars Amount
Opening stock
Net purchases
Manu. Expenses
Gross profit
70,000
2,18,000
21,000
90,000
3,99,000
Sales
Closing stock ( stock on
the date of fire)
balancing figure
3,60,000
39,000
3,99,000
Gross profit=
3,60,000X25%= 9,0000
 Calculation of net loss of stock
 = stock on the date of fire 39,000
 Less: salvaged value of stock 8,000
 Loss of stock 31,000
Solution to p.2
 Calculation of gross profit
 Memorandum Trading a/c as on 31.3.2016
 Particulars Amount particulars Amount
Stock on 1.4.15
Net purchases
Wages & manu.
Gross Profit (b/f)
40,000
4,20,000
40,000
1,50,000
6,50,000
Sales
Closing stock
6,00,000
50,000
6,50,000
Gross profit
= gross profit/net
sales x 100
1,50,000/6
00000
x100
25%
Solution to p.2
 Gross profit rate= 25%
 Memorandum Trading a/c as on 15.8.2016
 Particulars Amount particulars Amount
Opening Stock
Net purchases
Wages & manu.
Gross Profit (% of
sales)
50,000
2,90,000
25,000
1,00,000
4,65,000
Sales
Closing stock
(b/f)
4,00,000
65,000
4,65,000
Gross profit = Salesx25% = 4,00,000X25% 1,00,000
 Calculation of net loss of stock
 = stock on the date of fire 65,000
 Less: salvaged value of stock 18,000
 Loss of stock 47,000
Illustration 6
Ascertainment of stock on the date of fire
Ascertainment of net loss of stock
Value of stock on the date of fire 66,000
Less; salvaged value 2,000
Claim to be lodged 64,000
Particulars Based
on last
year rate
actuals particulars Based on
last year
rate
actuals
To, 0,stock
‘purchases
‘gross profit
30,000
80,000
50,000
30,000
88,000
53,000
By sales
‘closing stock
1,00,000
66,000
1,05,000
60,000
1,60,000 1,71,000 1,60,000
Poor selling goods
Sometimes stock of a business may include
some goods which are shope-soiled*,
outdated, etc. which are called as poor selling
goods.
These goods are generally valued at below cost and
in effect, gross profit is reduced. On determining the
normal rate of gross profit, the stock and sales
proceeds of these goods are to be eliminated from the
stock and total sales.
Trading Account in such cases, is prepared in
columnar form to show separately the normal and
abnormal items.
*Slightly dirty, damaged
 Wn.1 Memorandum Trading a/c as on 31.12.2015
Particulars Amount particulars Amount
To, Opening Stock
Net purchase
Gross Profit c/d
(balancing figure)
27,570
2,71,350
1,05,300
Sales
Closing stock
Normal item
(51,120- 1,500 )
Abnormal item
3,51,000
49,620
3,600
4,04,220 4,04,220
Gross profit rate= GP/Net
salesx100
=
1,05,300/3,51,000X10
0
=30%
Memorandum Trading a/c 1.1.16 to 31.3.16
Particulars normal abnorm
al
particulars normal abnorm
al
To, Opening
Stock
Net purchase
Gross Profit
c/d ( % of sales)
49,620
90,000
26,640
3,600
xxx
Sales
loss
Closing
stock
(balancing
fig)
88,800
77,460
2,700
9,00
1,66,260 3,600 1,66,260 3,600
Wn 2,purchases 75,000+
goods
received
but not
recorded
75,000+
15,000
= 90,000 Gp=88,800
x30/100
26640
 Wn 3.
 Actual sales 91,500- abnormal sales (2,700)= normal
sales =88,800
Statement of claim to be lodged
Book value of stock on the date of fire
=77,460
Less: salvaged stock 6,300
Loss of stock 71,160
Loss of profit insurance policy / consequential
loss policy
“A loss of profit policy is a policy attached to the
fire insurance policy, where the insured will be
compensated also for loss in profit due to
interruption in business activities due to fire in
addition to loss of stock. ’’
This policy is taken to cover the loss of
profit occurred due to the interruption of fire in a
business.
Ex: dislocation, inconvenience
A fire insurance policy differs from a loss of profit policy on
the following grounds:
(1) While a fire insurance policy covers loss of or
damage to insured property such as Building,
stock etc., a loss of profit policy covers loss of
gross profit sustained inconsequent of a business
interruption.
(ii) The subject matter of fire insurance is tangible
and covers material property. In the case of loss of
profits insurance, it is intangible and covers the
earning capacity of the business.
Loss of profits insurance covers the following
risks consequent upon fire.
 1.Loss of net profits due to stoppage of business.
 2.Payment of standing charges such as salaries,
rent, rates and taxes, director's fees, lighting and
heating. repairs and maintenance, depreciation,
postage and stationery. etc. which the insured is
obliged to incur in spite of stoppage of business.
The insured has to specify the standing charges
which he would like to insure.
 3. Increased working expenses incurred by the
insured during the indemnity period in order to
maintain normal business activity.
Explanation of certain terms
 Gross profit:
 It is the sum obtained on adding the amount of
the insured standing charges to the net profit.
 Gross profit = Net profit + Insured standing
charges
 If there is net loss, gross profit is the amount
of insured standing charges less such a
proportion of any net trading loss as the
amount of the insured standard charges bear to
all the standing charges (insured + uninsured)
of the business.
Explanation of certain terms
 Net Profit:
 It is the net trading profit resulting
from the business of the insured at the
premises after due provision has been
made for all standing and other charges
including depreciation but before the
deduction of any taxation chargeable on
profits
Explanation of certain terms
 Insured Standing Charges:
 The insured standing charges are those charges specified in
the policy which the insured desires to recover in the case of
an accident. It may include the following:
 i. Rent, rates and taxes (not related with the profit of the
business):
 ii. Interest on debentures and loans;
 iii. Salaries of permanent staff:
 iv. Wages of skilled workers;
 v. Directors' fees
 vi. Auditor's fees;
 vii. Advertising:
 viii. Travelling and
 ix. Unspecified standing charges (not exceeding 5% of the
amount of specified standing charges)
Explanation of certain terms
 Turnover: The money paid or payable to the
insured for goods sold and delivered and for
services rendered. In other words it is the
total sales effected in a trading concern
during the period.
 Annual Turnover: It is the turnover during
the twelve months immediately preceding
the date of the damage or fire.
 Indemnity Period: It is the period beginning
with the occurrence of the damage and
ending not later than 12 months thereafter
during which the results of the business
shall be affected as a consequence of
damage by fire.
 Date of fire 1st sept 2020
 Turn over .. 1.4.2019 to 31.3.2020
 Annual turnover 1.9.2019 to 31.8.2020
 Indemnity period 1.9.2020 to 30.11.2020 , 3 months
 Stand turn over= turn over /sales during 1.9.2019 to
30.11.2019 , (1,00,000)
 Actual turn over = turn over during current indemnity
period (1.9.2020 to 30.11 .2020)(20,000)
 Short sales= standard turnover – actual turn over
 =1,00,000-20,000=80,000
Explanation of certain terms
 Standard Turnover:
 It is the turnover during that period in the
twelve months immediately before the date
of damage which corresponds with the
indemnity period.
 It means that if the indemnity period is 4
months (Ist August to 30th November of
2020). the standard turn over will also be
for 4 months (I st August to 30th
November 2019).
 Rate of Gross Profit: It is the rate of gross
profit earned on the turnover during the
 financial year immediately before the date
of the damage
Procedure or Steps in calculating the
amount of loss in profit
 1. Calculation of rate of gross profit:
 Rate of Gross Profit =
Net Profit + Insured standing charges x100
Sales of the FY preceding the year of fire
 2. Calculation of short sales: Short sales is the
shortage in sales during the indemnity period
because of dislocation in business due to fire. It is the
difference between standard sales and actual sales of
dislocated (indemnity) period. Standard sales is one
after adjustment for necessary trend or business and
for variation in the business either before or after
the damage or which would have affected the
business had the damage not occurred.
Procedure or Steps in calculating the
amount of loss in profit
 3.Calculation of gross profit on short sales =
Short sales X Gross profit rate
 4. Calculation of the amount of admissible
additional expenses as follows:
 The least of the following shall be taken as
admissible additional expenses.
 (i) Actual expenses incurred
 (ii) Gross profit on additional sales
 (iii)additional exp X
GP on annual turnover
GP on annual turnover + uninsured standing
charges
Procedure or Steps in calculating the
amount of loss in profit
Additional expenses X NP+Insured standing
charges
Net profit+ All standing charges
 5. Calculation of amount of gross claim:
Amount of claim = Gross profit on short sales
+ Admissible additional expenses - any
savings in insured standing charges during the
period of indemnity.
 6. Application of average clause:
Net claim = Gross claim X Policy value
GP on annual Turnover
 1) rate of gross profit= net profit + standing
charges/sales
 = 3,50,000+3,63,000x 100=15%
47,50,000
2) Short sales= standard –actual sales
=15,00,000-2,00,000=13,00,000
3) Loss of profit=GP on short sales
=13,00,000x15%=1,95,000
4) Admissible additional expenses =16,000
5) Gross claim= loss of profit + admissible expenses-
savings in insured standing charges
=1,95,000+16,000-8,000=2,03,000
6) Net claim = gross claim x policy value
GP on Annual TO
=2,03,000X 6,00,000/15% of 50,00,000
= 1,62,400
Solution to practical problem 13
 1) rate of gross profit
 = net profit +insured standing charges
net sales
= 16,00,000+4,00,000 x100= 25%
80,00,000
2) Calculation of short sales = standard- actual sales
36,00,000-6,00,000=30,00,000
3) Loss of profit/ GP on short sales = short sales x GP
Rate =30,00,000x 25% =7,50,000
Solution to practical problem 13
 4) admissible additional expenses = 14,000
 5) calculation of gross claim=
loss of profit/GP on Short sales + admissible
expenses – salvaged value in insured standing charges
= 750,000+14,000 – 4,000 =7,60,000
6) Net claim= gross claim x policy value
GP on annual turn over
= 7,60,000 x 16,00,000/(25% 0f 88,00,000)
=5,52,727
Solution to illustration 12
WN:1 CALCULATION OF AMOUNT RECEIVED FROM DEBTORS
BANK ACCOUNT
Particulars Amount Particulars Amount
To, balance b/d
; debtors
(balancing fig.)
60,000
2,58,000
By, creditors
‘Wages
(12,000X2)
‘Sundry expenses
(6000X2)
‘Balance c/d
2,40,000
24,000
12,000
42,000
3,18,000 3,18,000
Solution to illustration 12
TOTAL DEBTORS ACCOUNT
Particulars Amount Particulars Amount
To, balance b/d
Sales (bal. fig.)
2,00,000
3,08,000
By, Bank
‘’’ balance c/d
2,58,000
2,50,000
5,08,000 5,08,000
Particulars Amount Particulars Amount
To, bank
To, balance c/d
(1,80,000)
2,40,000
1,80,000
By, balance B/d
‘” Purchases
(balancing fig,)
1,80,000
2,40,000
4,20,000 4,20,000
TOTAL CREDITORS ACCOUNT
Solution to illustration 12
Ascertainment of stock on the date of fire
memorandum trading account
for the period from 1.4.2017 to 15.5.2017
Particulars Amount Particular
s
Amount
To, opening stock
“ purchases 2,40,000
+ invoice not received 20,000
’’ Wages (12,000x2)
“gross profit
(25% of sales)
(3,08,000x25%)
50,000
2,60,000
24,000
77,000
By, Sales
‘closing
stock
(Balancing
fig.)
3,08,000
1,03,000
4,11,000 4,11,000
Statement of claim for loss of stock as on 15th MAY 2017
Book value of stock on the date of fire (closing stock) - 1,03,000
Less : salvaged stock - xxxxx
Loss of stock - 1,03,000
Practical problem 8
Solution to practical problem 8
WN:1 CALCULATION OF AMOUNT OF CREDIT PURCHASES
TOTAL CREDITORS ACCOUNT
Particulars Amount Particulars Amount
To, Cash (98,016-562)
To, Bills receivable
To, goods returned
To, balancing c/d
97,454
562
6,390
22,112
By, Balance b/d
“ credit purchases
(Balancing figure)
24,608
1,01,910
1,26,518 1,26,518
Solution to practical problem 8
Ascertainment of stock on the date of fire
memorandum trading account
Particulars Amount Particulars Amount
To, opening stock
“ purchases 1,01,910
- Drawings 2,000
- Free samples 8,000
- goods returned 6,390
“ Gross profit
(15% of sales ie,1,09,200)
58,820
8,55,20
16,380
By, Sales
“Closing stock
(Balancing fig.)
1,09,200
51,520
1,60,720 1,60,720
Statement of claim for loss of stock as on 31st December 2017
Book value of stock on the date of fire (closing stock) - 51,520
Less : salvaged stock - 1,520
Loss of stock 50,000

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Insurance claims

  • 1. Solution : practical problem 1 Memorandum trading account particulars Amount particulars Amount Opening stock Net purchases Manu. Expenses Gross profit 70,000 2,18,000 21,000 90,000 3,99,000 Sales Closing stock ( stock on the date of fire) balancing figure 3,60,000 39,000 3,99,000 Gross profit= 3,60,000X25%= 9,0000
  • 2.  Calculation of net loss of stock  = stock on the date of fire 39,000  Less: salvaged value of stock 8,000  Loss of stock 31,000
  • 3. Solution to p.2  Calculation of gross profit  Memorandum Trading a/c as on 31.3.2016  Particulars Amount particulars Amount Stock on 1.4.15 Net purchases Wages & manu. Gross Profit (b/f) 40,000 4,20,000 40,000 1,50,000 6,50,000 Sales Closing stock 6,00,000 50,000 6,50,000 Gross profit = gross profit/net sales x 100 1,50,000/6 00000 x100 25%
  • 4. Solution to p.2  Gross profit rate= 25%  Memorandum Trading a/c as on 15.8.2016  Particulars Amount particulars Amount Opening Stock Net purchases Wages & manu. Gross Profit (% of sales) 50,000 2,90,000 25,000 1,00,000 4,65,000 Sales Closing stock (b/f) 4,00,000 65,000 4,65,000 Gross profit = Salesx25% = 4,00,000X25% 1,00,000
  • 5.  Calculation of net loss of stock  = stock on the date of fire 65,000  Less: salvaged value of stock 18,000  Loss of stock 47,000
  • 7. Ascertainment of stock on the date of fire Ascertainment of net loss of stock Value of stock on the date of fire 66,000 Less; salvaged value 2,000 Claim to be lodged 64,000 Particulars Based on last year rate actuals particulars Based on last year rate actuals To, 0,stock ‘purchases ‘gross profit 30,000 80,000 50,000 30,000 88,000 53,000 By sales ‘closing stock 1,00,000 66,000 1,05,000 60,000 1,60,000 1,71,000 1,60,000
  • 8. Poor selling goods Sometimes stock of a business may include some goods which are shope-soiled*, outdated, etc. which are called as poor selling goods. These goods are generally valued at below cost and in effect, gross profit is reduced. On determining the normal rate of gross profit, the stock and sales proceeds of these goods are to be eliminated from the stock and total sales. Trading Account in such cases, is prepared in columnar form to show separately the normal and abnormal items. *Slightly dirty, damaged
  • 9.
  • 10.  Wn.1 Memorandum Trading a/c as on 31.12.2015 Particulars Amount particulars Amount To, Opening Stock Net purchase Gross Profit c/d (balancing figure) 27,570 2,71,350 1,05,300 Sales Closing stock Normal item (51,120- 1,500 ) Abnormal item 3,51,000 49,620 3,600 4,04,220 4,04,220 Gross profit rate= GP/Net salesx100 = 1,05,300/3,51,000X10 0 =30%
  • 11. Memorandum Trading a/c 1.1.16 to 31.3.16 Particulars normal abnorm al particulars normal abnorm al To, Opening Stock Net purchase Gross Profit c/d ( % of sales) 49,620 90,000 26,640 3,600 xxx Sales loss Closing stock (balancing fig) 88,800 77,460 2,700 9,00 1,66,260 3,600 1,66,260 3,600 Wn 2,purchases 75,000+ goods received but not recorded 75,000+ 15,000 = 90,000 Gp=88,800 x30/100 26640
  • 12.  Wn 3.  Actual sales 91,500- abnormal sales (2,700)= normal sales =88,800 Statement of claim to be lodged Book value of stock on the date of fire =77,460 Less: salvaged stock 6,300 Loss of stock 71,160
  • 13. Loss of profit insurance policy / consequential loss policy “A loss of profit policy is a policy attached to the fire insurance policy, where the insured will be compensated also for loss in profit due to interruption in business activities due to fire in addition to loss of stock. ’’ This policy is taken to cover the loss of profit occurred due to the interruption of fire in a business. Ex: dislocation, inconvenience
  • 14. A fire insurance policy differs from a loss of profit policy on the following grounds: (1) While a fire insurance policy covers loss of or damage to insured property such as Building, stock etc., a loss of profit policy covers loss of gross profit sustained inconsequent of a business interruption. (ii) The subject matter of fire insurance is tangible and covers material property. In the case of loss of profits insurance, it is intangible and covers the earning capacity of the business.
  • 15. Loss of profits insurance covers the following risks consequent upon fire.  1.Loss of net profits due to stoppage of business.  2.Payment of standing charges such as salaries, rent, rates and taxes, director's fees, lighting and heating. repairs and maintenance, depreciation, postage and stationery. etc. which the insured is obliged to incur in spite of stoppage of business. The insured has to specify the standing charges which he would like to insure.  3. Increased working expenses incurred by the insured during the indemnity period in order to maintain normal business activity.
  • 16. Explanation of certain terms  Gross profit:  It is the sum obtained on adding the amount of the insured standing charges to the net profit.  Gross profit = Net profit + Insured standing charges  If there is net loss, gross profit is the amount of insured standing charges less such a proportion of any net trading loss as the amount of the insured standard charges bear to all the standing charges (insured + uninsured) of the business.
  • 17. Explanation of certain terms  Net Profit:  It is the net trading profit resulting from the business of the insured at the premises after due provision has been made for all standing and other charges including depreciation but before the deduction of any taxation chargeable on profits
  • 18. Explanation of certain terms  Insured Standing Charges:  The insured standing charges are those charges specified in the policy which the insured desires to recover in the case of an accident. It may include the following:  i. Rent, rates and taxes (not related with the profit of the business):  ii. Interest on debentures and loans;  iii. Salaries of permanent staff:  iv. Wages of skilled workers;  v. Directors' fees  vi. Auditor's fees;  vii. Advertising:  viii. Travelling and  ix. Unspecified standing charges (not exceeding 5% of the amount of specified standing charges)
  • 19. Explanation of certain terms  Turnover: The money paid or payable to the insured for goods sold and delivered and for services rendered. In other words it is the total sales effected in a trading concern during the period.  Annual Turnover: It is the turnover during the twelve months immediately preceding the date of the damage or fire.  Indemnity Period: It is the period beginning with the occurrence of the damage and ending not later than 12 months thereafter during which the results of the business shall be affected as a consequence of damage by fire.
  • 20.  Date of fire 1st sept 2020  Turn over .. 1.4.2019 to 31.3.2020  Annual turnover 1.9.2019 to 31.8.2020  Indemnity period 1.9.2020 to 30.11.2020 , 3 months  Stand turn over= turn over /sales during 1.9.2019 to 30.11.2019 , (1,00,000)  Actual turn over = turn over during current indemnity period (1.9.2020 to 30.11 .2020)(20,000)  Short sales= standard turnover – actual turn over  =1,00,000-20,000=80,000
  • 21. Explanation of certain terms  Standard Turnover:  It is the turnover during that period in the twelve months immediately before the date of damage which corresponds with the indemnity period.  It means that if the indemnity period is 4 months (Ist August to 30th November of 2020). the standard turn over will also be for 4 months (I st August to 30th November 2019).  Rate of Gross Profit: It is the rate of gross profit earned on the turnover during the  financial year immediately before the date of the damage
  • 22. Procedure or Steps in calculating the amount of loss in profit  1. Calculation of rate of gross profit:  Rate of Gross Profit = Net Profit + Insured standing charges x100 Sales of the FY preceding the year of fire  2. Calculation of short sales: Short sales is the shortage in sales during the indemnity period because of dislocation in business due to fire. It is the difference between standard sales and actual sales of dislocated (indemnity) period. Standard sales is one after adjustment for necessary trend or business and for variation in the business either before or after the damage or which would have affected the business had the damage not occurred.
  • 23. Procedure or Steps in calculating the amount of loss in profit  3.Calculation of gross profit on short sales = Short sales X Gross profit rate  4. Calculation of the amount of admissible additional expenses as follows:  The least of the following shall be taken as admissible additional expenses.  (i) Actual expenses incurred  (ii) Gross profit on additional sales  (iii)additional exp X GP on annual turnover GP on annual turnover + uninsured standing charges
  • 24. Procedure or Steps in calculating the amount of loss in profit Additional expenses X NP+Insured standing charges Net profit+ All standing charges  5. Calculation of amount of gross claim: Amount of claim = Gross profit on short sales + Admissible additional expenses - any savings in insured standing charges during the period of indemnity.  6. Application of average clause: Net claim = Gross claim X Policy value GP on annual Turnover
  • 25.
  • 26.
  • 27.  1) rate of gross profit= net profit + standing charges/sales  = 3,50,000+3,63,000x 100=15% 47,50,000 2) Short sales= standard –actual sales =15,00,000-2,00,000=13,00,000 3) Loss of profit=GP on short sales =13,00,000x15%=1,95,000 4) Admissible additional expenses =16,000 5) Gross claim= loss of profit + admissible expenses- savings in insured standing charges =1,95,000+16,000-8,000=2,03,000 6) Net claim = gross claim x policy value GP on Annual TO =2,03,000X 6,00,000/15% of 50,00,000 = 1,62,400
  • 28.
  • 29. Solution to practical problem 13  1) rate of gross profit  = net profit +insured standing charges net sales = 16,00,000+4,00,000 x100= 25% 80,00,000 2) Calculation of short sales = standard- actual sales 36,00,000-6,00,000=30,00,000 3) Loss of profit/ GP on short sales = short sales x GP Rate =30,00,000x 25% =7,50,000
  • 30. Solution to practical problem 13  4) admissible additional expenses = 14,000  5) calculation of gross claim= loss of profit/GP on Short sales + admissible expenses – salvaged value in insured standing charges = 750,000+14,000 – 4,000 =7,60,000 6) Net claim= gross claim x policy value GP on annual turn over = 7,60,000 x 16,00,000/(25% 0f 88,00,000) =5,52,727
  • 31.
  • 32. Solution to illustration 12 WN:1 CALCULATION OF AMOUNT RECEIVED FROM DEBTORS BANK ACCOUNT Particulars Amount Particulars Amount To, balance b/d ; debtors (balancing fig.) 60,000 2,58,000 By, creditors ‘Wages (12,000X2) ‘Sundry expenses (6000X2) ‘Balance c/d 2,40,000 24,000 12,000 42,000 3,18,000 3,18,000
  • 33. Solution to illustration 12 TOTAL DEBTORS ACCOUNT Particulars Amount Particulars Amount To, balance b/d Sales (bal. fig.) 2,00,000 3,08,000 By, Bank ‘’’ balance c/d 2,58,000 2,50,000 5,08,000 5,08,000 Particulars Amount Particulars Amount To, bank To, balance c/d (1,80,000) 2,40,000 1,80,000 By, balance B/d ‘” Purchases (balancing fig,) 1,80,000 2,40,000 4,20,000 4,20,000 TOTAL CREDITORS ACCOUNT
  • 34. Solution to illustration 12 Ascertainment of stock on the date of fire memorandum trading account for the period from 1.4.2017 to 15.5.2017 Particulars Amount Particular s Amount To, opening stock “ purchases 2,40,000 + invoice not received 20,000 ’’ Wages (12,000x2) “gross profit (25% of sales) (3,08,000x25%) 50,000 2,60,000 24,000 77,000 By, Sales ‘closing stock (Balancing fig.) 3,08,000 1,03,000 4,11,000 4,11,000 Statement of claim for loss of stock as on 15th MAY 2017 Book value of stock on the date of fire (closing stock) - 1,03,000 Less : salvaged stock - xxxxx Loss of stock - 1,03,000
  • 36. Solution to practical problem 8 WN:1 CALCULATION OF AMOUNT OF CREDIT PURCHASES TOTAL CREDITORS ACCOUNT Particulars Amount Particulars Amount To, Cash (98,016-562) To, Bills receivable To, goods returned To, balancing c/d 97,454 562 6,390 22,112 By, Balance b/d “ credit purchases (Balancing figure) 24,608 1,01,910 1,26,518 1,26,518
  • 37. Solution to practical problem 8 Ascertainment of stock on the date of fire memorandum trading account Particulars Amount Particulars Amount To, opening stock “ purchases 1,01,910 - Drawings 2,000 - Free samples 8,000 - goods returned 6,390 “ Gross profit (15% of sales ie,1,09,200) 58,820 8,55,20 16,380 By, Sales “Closing stock (Balancing fig.) 1,09,200 51,520 1,60,720 1,60,720 Statement of claim for loss of stock as on 31st December 2017 Book value of stock on the date of fire (closing stock) - 51,520 Less : salvaged stock - 1,520 Loss of stock 50,000