Damaged material

This query is : Resolved

Baljinder Singh (Querist)
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27 June 2009 Dear Sir,

We have raised Invoice to customer for sale of material, but in transit material damaged. Party return back material to us.

The damaged material claim received from Insurance company.

My question is : Is the Insurance claim received shown under the head of misce. Income or down the purchase value of raw material materail ?

Pls give me your valuable advise.

Baljinder Singh

Sanjeev Jain

Sanjeev Jain (Expert)
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27 June 2009 Hie Baljinder,

01. Purchase value will be down with the amount of damaged material.
02. Insurance claim will be credited in the profit and loss account as Misc income as you stated in your ques.
03. Debit the Insurance co. with the claim amt. in the Loans & Advances side.