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