Question

A company suffers a fire and inventory is destroyed, an insurance payment is agreed but not received at year end, what's the journal entries?

Answer 1

The journal entries for a company that suffers a fire and has inventory destroyed, with an insurance payment agreed but not received at year end.

Step-by-step explanation:

The journal entries for a company that suffers a fire and has inventory destroyed, with an insurance payment agreed but not received at year end, would be as follows:

1. Debit: Insurance Receivable, Credit: Insurance Income
2. Debit: Loss on Inventory, Credit: Inventory
3. Debit: Inventory, Credit: Gain on Insurance Settlement
4. Debit: Cash, Credit: Insurance Receivable

The first entry records the estimated insurance income that the company expects to receive. The second entry recognizes the loss on inventory as an expense. The third entry recognizes the gain on the insurance settlement as income. The final entry records the actual receipt of the insurance proceeds.