advance financial accounting topic insurance claim. financial accounting volume 2 by A.Mukerjee chapter 7

1. (Chapter 7) Insurance Claim
1 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
(A) Loss of stock
Q 1. Working:
Average gross profit rate:
Gross profit rate = Gross profit / sales *100
1997 =215000 / 860000 *100 =25%
1998 =213000 / 710000 *100 =30%
1999 =210000 / 600000 *100 =35%
2000 =187000 / 550000 *100 =34%
2001 =172800 / 480000 *100 =36%
Average gross profit rate = (25+30+35+34+36) / 5
=160 / 5
=32%
Johnson & Co.
Memorandum trading account
For the period from 1-1-2002 to 15-4-2002
Rs. Rs.
To Opening stock a/c 97000 By Sales a/c 159000
To Purchases a/c 75000 By Closing Stock A/c 93880
To Wages a/c 30000 (Balancing Figure)
To Gross Profit (159000 * 32%) 50880
252880 252880

2. (Chapter 7) Insurance Claim
2 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Statement of insurance claim for loss of stock
Rs.
Stock on the date of fire / book value of stock on the date of fire
Less: Stock saved
93880
18000
Net claim to be submitted 75880
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Q 2. Solution
Spark Ltd.
Memorandum trading account
For the period from 1-1-2002 to 1-7-2002
Rs. Rs.
To Opening stock a/c (148500 *
100 / 110) 135000 By Sales a/c 450000
To Purchases a/c 210000 By Closing Stock A/c 75000
To Wages a/c 90000 (Balancing Figure)
To Gross Profit (450000 * 20%) 90000
525000 525000

3. (Chapter 7) Insurance Claim
3 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Statement of insurance claim for loss of stock
Rs.
Stock on the date of fire / book value of stock on the date of fire
Less: Stock saved
75000
30000
Net claim to be submitted 45000
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Q 3. Solution
Note: Purchases is missing so first we should find out purchases
Payment to creditors Rs. 75000
Add: closing creditors 1800 .
76800
Less: opening creditors 3500 .
Purchases 73300 .
In the books of “M”
Memorandum trading account
For the period from 1-1-2002 to 27-6-2002
Rs. Rs.
To Opening stock a/c 12500 By Sales a/c 88800
To Purchases a/c 73300 By Closing Stock A/c 14000
(Balancing Figure)
To Gross Profit (88800-
3800=85000 * 25 / 125 ) 17000
102800 102800

4. (Chapter 7) Insurance Claim
4 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Statement of insurance claim for loss of stock
Rs.
Stock on the date of fire / book value of stock on the date of fire
Less: Stock saved
14000
7000
Net value of stock burnt 7000
10500 : 14000
? : 7000
By cross multiplication (10500 * 7000) / 14000 = 5250
So
Net claim to be submitted = Rs. 5250
OR
Net claim to be submitted = (loss of stock * policy Value) / Value of stock on the date of fire
= (7000 * 10500) / 14000 = 5250
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5. (Chapter 7) Insurance Claim
5 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Q4. Solution
Bombay sports House
Trading account
For the year ended 31-05-2001
Rs. Rs.
To Opening stock a/c (105754 *
100 / 110) 96140 By Sales a/c 520000
To Purchases a/c 452580
By Closing Stock A/c
(145992 * 100 / 110) 132720
To Gross Profit 104000
(Balancing Figure)
652720 652720
Gross profit rate:
Gross profit rate = Gross profit / sales *100
=104000 / 520000 *100
= 20%

6. (Chapter 7) Insurance Claim
6 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Bombay sports House
Memorandum trading account
For the period from 01-06-2001 to 01-04-2002
Rs. Rs.
To Opening stock a/c (145992 *
100 / 110) 132720
By Sales a/c
491700 Add: un recorded cash
sales 4000 495700
To Purchases a/c
348270 By Closing Stock A/c 74430
Less: free samples
10000 338270 (Balancing Figure)
To Gross Profit (495700 * 20%) 99140
570130 570130
So,
Estimated stock in hand on the date of fire = Rs. 74430
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7. (Chapter 7) Insurance Claim
7 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Q5. Solution
Eagle Pen Company
Trading account
For the year ended 31-12-2000
Rs. Rs.
To Opening stock a/c 9614 By Sales a/c 52000
To Purchases a/c 45258 By Closing Stock A/c 13272
To Gross Profit 10400
(Balancing Figure)
65272 65272
Gross profit rate:
Gross profit rate = Gross profit / sales *100
=10400 / 52000 *100
= 20%

8. (Chapter 7) Insurance Claim
8 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Eagle Pen Company
Memorandum trading account
For the period from 01-01-2001 to 22-10-2001
Rs. Rs.
To Opening stock a/c 13272
By Sales a/c
49170 Add: un recorded cash
sales * 400 49570
To Purchases a/c
34827 By Closing Stock A/c 7443
Less: free samples
1000 33827 (Balancing Figure)
To Gross Profit (495700 * 20%) 9914
57013 57013
*Unrecorded cash sales: jan-31 + feb-28 + mar-31 + apr-30 + may-21 = 141 days
141/7 = 20 weeks * Rs 20 = Rs 400
So,
Estimated stock in hand on the date of fire = Rs. 7443
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9. (Chapter 7) Insurance Claim
9 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Q6. Solution
X Co. Ltd.
Trading account
For the year ended 31-12-2001
Rs. Rs.
To Opening stock a/c 20000 By Sales a/c 60000
To Purchases a/c 40000 By Closing Stock A/c 30000
To Gross Profit 30000
(Balancing Figure)
90000 90000
Gross profit rate:
Gross profit rate = Gross profit / sales *100
=30000 /60000 *100
= 50%
Last year’s level: current year’s level:
Sales 100 Sales (100+ 5%) 105
Less: Gross Profit 50. Less: Cost (50+ 10%) 55.
Cost 50. Gross profit 50.

10. (Chapter 7) Insurance Claim
10 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Sales value and gross profit out of current year’s opening stock:
Sales value Rs. 63000
(30000*105)/50
Less: Cost value 30000.
Gross profit 33000.
(Out of current year’s opening stock)
Sales value and gross profit out of current year’s purchased goods:
Sales value (105000 – 63000) Rs. 42000
Cost value (42000*55)/105 22000.
Gross profit 20000.
X Co. Ltd.
Memorandum trading account
For the period from 01-01-2002 to15-09-2002
Rs. Rs.
To Opening stock a/c 30000 By Sales a/c (63000+42000) 105000
To Purchases a/c 88000 By Closing Stock A/c 66000
(Balancing Figure)
To Gross Profit 53000
(33000+20000)
171000 171000

11. (Chapter 7) Insurance Claim
11 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Statement of insurance claim for loss of stock
Rs.
Stock on the date of fire / book value of stock on the date of fire
Less: Stock saved
66000
2000
Net value of stock burnt / net claim to be lodged 64000
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Q7. Solution
ABC firm
Trading account
For the year ended 30-04-2002
Rs. Rs.
To Opening stock a/c 44300 By Sales a/c 152500
To Purchases a/c 103850
By Closing Stock A/c:
Normal (37550-1000)
36550
Abnormal (800+1000)
1800 38350
To Gross Profit 42700
(Balancing Figure)
190850 190850
Gross profit rate:
Gross profit rate = Gross profit / sales *100
=42700 /152500 *100
= 28%

12. (Chapter 7) Insurance Claim
12 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
ABC Firm
Memorandum trading account
For the period from 01-05-2002 to 01-10-2002
normal
items
Abnormal
items
Total
normal
items
Abnormal
items
Total
To Opening stock a/c
Rs.
36550 Rs. 1800
Rs.
38350 By Sales a/c
Rs.
57250 Rs. 1750
Rs.
59000
By Gross Loss a/c 50 50
To Purchases a/c 37350 37350 By Closing Stock A/c 32680 32680
(Balancing Figure)
To Gross Profit (57250 *
28%) 16030 16030
89930 1800 91730 89930 1800 91730
Statement of insurance claim for loss of stock
Rs.
Stock on the date of fire / book value of stock on the date of fire
Less: Stock saved
32680
5105
Net value of stock burnt / net claim to be lodged 27575

13. (Chapter 7) Insurance Claim
13 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Q8. Solution
Stone Ltd.
Trading account
For the year ended 31-12-2001
Rs. Rs.
To Opening stock a/c 75000 By Sales a/c 400000
To Purchases a/c 310000
By Closing Stock A/c:
Normal (80000+200)
80200
Abnormal (5000-200)
4800 85000
To Gross Profit 100000
(Balancing Figure)
485000 485000
Gross profit rate:
Gross profit rate = Gross profit / sales *100
=100000 /400000 *100
= 25%

14. (Chapter 7) Insurance Claim
14 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Stone Ltd.
Memorandum trading account
For the period from 01-01-2002 to 01-04-2002
normal
items
Abnormal
items
Total
normal
items
Abnormal
items
Total
To Opening stock a/c
Rs.
80200 Rs. 4800
Rs.
85000 By Sales a/c
Rs.
98000 Rs. 2000
Rs.
100000
By Gross Loss a/c 400 400
To Purchases a/c 75000 75000 By Closing Stock A/c 81700 2400 84100
(Balancing Figure)
To Gross Profit (98000 *
25%) 24500 24500
179700 4800 184500 179700 4800 184500
Statement of insurance claim for loss of stock
Rs.
Stock on the date of fire / book value of stock on the date of fire
Less: Stock saved
84100
5000
Net value of stock burnt / net claim to be lodged 79100
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15. (Chapter 7) Insurance Claim
15 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
Q9. Solution
ABC Company
Trading account
For the year ended 31-12-2001
Rs. Rs.
To Opening stock a/c 30000 By Sales a/c 250000
To Purchases a/c 200000
By Closing Stock A/c:
Normal (40000-1500)
38500
Abnormal (2500+1500)
4000 42500
To Gross Profit 62500
(Balancing Figure)
292500 292500
Gross profit rate:
Gross profit rate = Gross profit / sales *100
=62500 /250000 *100
= 25%

16. (Chapter 7) Insurance Claim
16 ARSHAD ISLAM; Contact no.: 0092-313-9911865; email: arshad_mccm@yahoo.com
ABC Company
Memorandum trading account
For the period from 01-01-2002 to 15-06-2002
normal
items
Abnormal
items
Total
normal
items
Abnormal
items
Total
To Opening stock a/c
Rs.
38500 Rs. 4000
Rs.
42500 By Sales a/c
Rs.
118500 Rs. 1500
Rs.
120000
By Gross Loss a/c 500 500
To Purchases a/c 85000 85000 By Closing Stock A/c 34625 2000 36625
(Balancing Figure)
To Gross Profit (118500
* 25%) 29625 29625
153125 4000 157125 153125 4000 157125
Statement of insurance claim for loss of stock
Rs.
Stock on the date of fire / book value of stock on the date of fire
Less: Stock saved
36625
5000
Net value of stock burnt / net claim to be lodged 31625
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