Insurance Claims Accounting

1. PROBLEM ON LOSS OF STOCK # 2

3. Steps in solving the problem

4. Trading Account 1.1.2014 to 31.12.2014
Step - I
Preparation of Trading Account of Last Year
Particulars Amount Particulars Amount
To Opening Stock 73500 By Sales 487000
To Purchases 398000 By Closing Stock 81900
To Gross profit (Bal.Fig) 97400
568900 568900

5. Step - II
Calculation of Gross Profit Percentage

6. Particulars Amount Particulars Amount
To Opening Stock 81900 By Sales 231200
To Purchases 162000 By Closing Stock
(Stock on the date
of fire)
58940
To Gross profit
(20% on 231200)
46240
290140 290140
To calculate stock on the date of fire

7. Step - IV
Calculation of actual loss
Stock on the date of fire 58940
(-) Stock Salvaged 5300
Actual loss by fire 53640

8. Step - V
Application of Average Clause
(When policy amount is less than the amount of stock on the date of fire)
Value of Insurance Policy
Value of Stock on the date
of fire
X Actual Loss
X
50000
58940
53640 =

9. Dr. Yashodhan Mithare
mithare@yashodhan.org