The document summarizes a problem involving the loss of stock due to a fire. Key points include incomplete records are available for a trading account, a new adjustment is needed for debtors, and an average clause exists in the insurance policy. A debtors account is prepared showing credit sales of Rs. 1,072,000. A memorandum trading account calculates gross profit of Rs. 268,000 and closing stock of Rs. 316,000. The actual loss from the fire is Rs. 300,000 after salvaging Rs. 16,000 of stock. Applying the average clause, the insurance claim is calculated as Rs. 284,810.12.
3. Important Points
Trading account is not required to be prepared; as
rate of gross profit is given.
Incomplete records are available
New adjustment about debtors
Average clause exists
4. Preparation of Debtors Account
Preparation of Memorandum Trading Account
Calculate actual loss
Apply average clause
5. Preparation of Debtors Account
Debtors Account
Debtors account is prepared to calculate credit sales
Particulars Amount Particulars Amount
To Balance b/d 320000 By cash received 1152000
To Credit Sales
(Balancing Figure)
1072000 By Balance c/d 240000
1392000 1392000
6. Memorandum Trading Account
Particulars Amount Particulars Amount
To Opening Stock 120000 By Sales 1072000
To Purchases 1000000
By stock on the date
of fire
316000
To Gross profit
(25% on 1072000)
268000
1388000 1388000
7. Calculation of Actual Loss
Stock on the date of fire 316000
Less – Stock Salvaged 16000
Actual loss by fire 300000
8. Calculation of Average Clause
Value of Insurance Policy
Value of Stock on the date
of fire
X Actual Loss
300000
316000
X 300000
Claim =284810.12
