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Fire Insurance Claim Problem 1 - Financial Accounting - B.COM / BBA / IPCC By Saheb Academy - YouTube
Channel: Saheb Academy
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hi guys we have already seen the
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introduction of this topic fire
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insurance claim and in this video I'm
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going to solve some problems on fire
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insurance claim this is the first
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problem and it's a simple problem okay
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in this question here it is said that
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fire occurred in the business premises
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of a Trader on 1/7/2013 and entire
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stock was destroyed entire stock was
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destroyed ok however the books and
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records less saved and the following
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information was obtained they have given
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us stock this is the opening stock and
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this is the closing stock 35 and 40
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thousand and they are also given on the
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purchases for the year ending 31/12/ 2012
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ok so this purchase is of from previous
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year and this sales is also from figures
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here and so all these four you will
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take with in trading account ok and
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these two we will take this in the
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memorandum trading account because this
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is from the current year that is till
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the date of fire 3/6/2013 30/6/ 2013 so we
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will take this too in the memorandum
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trading account okay now first we
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prepare the trading account then we'll
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prepare the memorandum trading account
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then we'll prepare the statement of fire
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claims to find out how much stock was
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destroyed in fire and was will be the
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final amount of claim that has to be
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compensated by the insurance company so
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we need to prepare for trading account
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Trading
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account first we will write to opening stock
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to opening stock in the question it is
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given 35,000
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we will take the purchases here on the
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debit side of trading account to
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purchases and the amount is purchases
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for the year ending 31/12/ 2012 that is
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80,000 okay 80,000 okay now we will take
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sales by sales always sales will come on
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the credit side of trading account okay
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and the purchase is on debit side so
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sales for year 2012 is one 1 lakh
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that by closing stock closing stock will
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come on the credit side of trading
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account that is for the year ended 2012
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and that is 40,000 okay all four of
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these are given in the question okay
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credit site is bigger which will be
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140,000 140,000 and
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i am balancing now we will find gross profit
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over here gross profit 140,000
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minus 35 minus 80 there is 25,000
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okay all right we have found the gross profit
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now after finding the Gross profit
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we need to find GP rate now you will say
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what is GP rate? GP rate is GP that is
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gross profit divided by sales into 100
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why we need to find GP rate
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we need to find gp rate to find the gross
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profit in the memorandum trading account
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ok so we will find the GP rate 25,000 divided by
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100,000 that is the sales into 100 that
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gives us 25 percentage ok now also
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after creating trading account
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finding the gross profit than finding
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the GP rate we will open memorandum
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trading account ok and this account is
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prepared to find closing stock on the
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date of fire remember on the date of
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fire ok so to find closing stock we
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already need gross profit that we will find
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by GP rate ok so first we'll take
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to opening stock in the question there is
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no such opening stock so we will take
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this closing stock as the opening stock
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here ok so that is 40,000 ok then there
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is purchases it's given in the question
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purchases till the date of fire and that
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is 37,000
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purchases always debit then
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this sales by sales always credit it's
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also given in the question sales till
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the date of fire and that is 60,000 ok
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ok then there is gross profit now how will
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we find gross profit? gross profit that
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is 25% GP rate for
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twenty-five percent twenty-five percent
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of sales 60,000
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into 25 by 100 okay so that gives us
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fifteen thousand easy right okay then
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this size has to be bigger okay this
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side is 92,000 92,000 then we will
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balance and find closing stock by
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closing stock and this closing is
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till the date of fire so now
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closing stock is a balancing figure
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balancing figure and 92,000 minus 60,000
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that is 32,000
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okay so easy right okay so now let's
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prepare the statement of fire claim okay
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so first we'll write here closing stock
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the closing stock on the date of
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fire this closing stock we found in the
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memorandum trading account okay so the
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amount would be 32,000 closing stock on the
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date of fire and the day also we must
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write that is 3/6/2013 as given in the
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question then we will subtract the value
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of stock salvaged this is a way to find
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the amount of claim so what does the
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salvage mean salvage is nothing but the
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amount of stock that was saved from the
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fire okay it's a simple term okay then
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we will find the amount of claim
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amount of okay okay so 32,000 minus
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value of stock salvage there's no such
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amount given in the question so we'll
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just put the dash and we'll take it as a
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NIL and 32,000 minus 0
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is 32,000 okay the amount of claim is 32,000
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what does this mean?
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it means that on this day there was 32,000
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worth of stock in the business premises
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and all of it was burned okay so the
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amount should be 30,000 equal to the
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loss incurred okay
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okay at first we prepared the trading
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account okay the opening stock purchases
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by sales closing stock all these four
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were given in the question okay and as
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a balancing figure we found out the
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gross profit that was 25,000 and this
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25,000 and the Sales 100,000 we applied
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to this formula to find out the GP rate
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GP by sales into 100 and we got 25%
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okay okay next we prepared the
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memorandum trading account we prepare
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this account to find closing stock the
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opening stock we got it from the trading
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accounts closing stock okay and
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purchases and sales were given in the
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question now gross profit we needed the
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gross profit to find the closing stock
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so gross profit we took 25%
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percentage of sales this sales okay so
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25% is the GP rate
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we found out after the trading account and
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we found out the closing stock till the
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date of fire 32,000 after preparing the
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memorandum trading account we prepared
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statement of fire claim and first wrote
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the closing stock which we found out in
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the memorandum trading account then we
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subtract it from the value of stock
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salvaged it was 0 so 32,000
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minus zero is 32,000 so the amount of
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claim is 32,000 okay easy right all right
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