A level Accounting HELP !

[123add1]

i want to know the procedures regarding damaged or stolen stock.plz tell me the effects of either of these situation s on the gross profit and the net profit.also tell me that when there is insurance claim what is the procedure then
Thankyou,

 

[Dewdrop95]

Stock loss/stock damage: There isn't really any procedure regarding this, all u do is ignore the closing stock given in the question and calculate the closing stock urself using the margin/mark-up given in the qs. The calculated closing stock will be the closing stock that should really be in the warehouse, and the closing stock's value given in the qs will be of the stock that is actually available in the warehouse. The difference shall be the stock loss/damage/pilferage.

When there is insurance claim on the whole stock/any other asset but the insurance company hasn't really paid it as yet u record it in the balance sheet under current assets because ur business is entitled to receive it(like the treatment of debtors). If the insurance claim is only on part of the stock and not the whole of it, the difference will be the business's expense.