Acharya Marathe College FYBAF

Fire Insurance Claim

Q.1. A fire occurred in the premises of Agni on 25th August 2013 when a large part of the stock was
destroyed. Salvage was Rs. 15,000. Agni gives you the following information for the period January 1 2013
to August 25th 2013:
(a) Purchases Rs. 85,000
(b) Sales Rs. 90,000
(c) Goods costing Rs. 5000 were taken by Agni for personal use.
(d) Cost price of stock on January 1, 2013 was Rs. 40,000
Over the past few years, Agni has been selling goods at a consistent gross profit margin of 33 1/3%
The insurance policy was for Rs.50,000. It included an average clause.
Agni asks you to prepare a statement of claim to be made on the insurance company.

Q.2. Bonfire Enterprises close their accounts on 30th June every year. On 30th September 2013 a major fire
destroyed most of their stock. Following information could be gathered from their books
Particulars Rupees
Stock on 30th June 2013 3,60,000
Purchases from 1st July 2013 to 30th September 2013 6,00,000
Wages – 1st July 2013 to 30th September 2013 2,30,000
Sales – 1st July 2013 to 30th September 2013 10,00,000
Carriage Inward for the above period 10,000
Carriage Outward for the above period 15,000

Average % of GP to cost is 33 1/3. Stock of the value Rs.75,000 could be salvaged. Policy was for
Rs.2,50,000. Claim was subject to average clause.
Following further information was available:
(1) Stock in the beginning was calculated at 10% less than cost.
(2) Purchase include purchase of furniture Rs.25,000.
(3) Amount spend for brining at setting up the furniture in the office was Rs.5,000 which was included
in carriage inward.
You are required to calculate the amount of claim.

Q.3. On 30th March 2013 fire occurred in the premises of M/s Suraj Brothers. The concern had taken an
insurance policy of Rs.60,000 which was subject to average clause. From the books of account the following
particulars are available relating to the period 1st Jan to 30th March 2013.
1. Stock as per balance sheet at 31st December 2012. Rs.95,800
2. Purchases (include purchase of Machinery costing Rs.30,000) Rs.1,70,000
3. Wages (including wages Rs.3,000 for installation of machinery) Rs.50,000
4. Sales (including goods sold on approval basis amounting to Rs.49,500) Rs.2,75,000
No approval as been received in respect of 2/3rd of the goods sold on approval.
5. The average rate of gross profit is 20% of sales.
6. The value of salvage goods is 12,300.
You are required to compute the amount of the claim to be lodged to the insurance company.

Q.4. On 18th October 2014 the premises of Mithila were destroyed but sufficient records were saved from
which the following particulars were found :
Particulars Rupees

Compiled by Dipesh Sir

Acharya Marathe College FYBAF

Stock (1-4-2013) 67,200

Stock (31-3-2014) 99,000
Purchases (FY 2013 - 14) 8,38,000
Sales (FY 2013 – 2014) 10,20,000
Purchases ( 1-4-2014 to 18-10-2014) 4,95,200
Sales (1-4-2014 to 18-10-2014) 5,19,000

Stock for the balance sheet at 31-3-2014 was valued at 10% above cost. During May 2014, Mithila had
withdrawn goods costing Rs.25,000. The policy was Rs.1,20,000. The stock salvage was worth Rs.29,000.
Show the amount of claim to be lodged with the insurance company.

Q.5. On 17-6-2013 due to a fire in the warehouse of Shri. Madan, the greater part of stocks was destroyed.
The business books were saved. Stock of the value Rs.2,820 was salvaged. The following particulars were
ascertained
Stock at 31-3-2012 Rs.14,400
Stock as per balance sheet on 31-3-2013 Rs.15,700
Purchases for the year 31-3-2013 Rs.30,600
Sales for the year ended 31-3-2013 Rs.50,000
Purchases from 1-4-2013 to 17-6-2013 Rs.12,500
Sales from 1-4-2013 to 17-6-2013 Rs.17,800
In valuing the stock as on 31-3-2013, Rs.300 was written off against a particular line of goods which was
originally purchased at Rs.600 and actually sold in April 2013 for Rs.500.
Excepting this transaction, the GP ratio remains the same. You are required to calculate the amount of loss
to be presented to the insurance company in respect of stocks destroyed by fire.

Q.6. On 16th June 2015 the premises of Balan were destroyed by fire but sufficient records were saved from
which the following particulars were found:
Stock (1-1-2014) Rs.50,000
Stock (31-12-2014) Rs.70,000
Purchases (2014) Rs.4,74,000
Sales (2014) Rs.6,00,000
Purchases from (1-1-2015 to 16-6-2015) Rs.1,50,000
Sales (1-1-2015 to 16-6-2015) Rs. 2,05,000
In Valuing the stock for the balance sheet 31-12-2014, Rs.4,000 has been written off certain stock having
cost Rs.9,000. Half of these goods were sold in March 2015 for Rs.5,000. The balance is estimated to be
worth the original cost. Subject to this exception, gross profit had remained at uniform rate. The stock
salvaged was worth Rs.9,500. Show the claim to be lodged with the insurance company.

Q.7. Baramathi Stores closed their books every year on 31st March. On 30th April 2016 their Premises and
Stock were destroyed by fire. From the books of accounts and other records the following information is
obtained. The stock on hand every year has always been valued at 10% less than the cost.
Particulars 2013-14 2014-15 2015-16 1-4-16 to
Rupees Rupees Rupees 30-4-16
Opening Stock 2,70,900 3,24,000 3,60,000 3,69,000
Purchase Less – Returns 7,49,000 8,00,000 8,10,000 60,000
Sales Less – Returns 12,00,000 13,20,000 14,00,000 1,20,000
Wages 1,74,000 1,90,000 2,09,000 20,000
Closing Stock 3,24,000 3,60,000 3,69,000 ------------

They have taken Fire Insurance Policy of 3,50,000 and there is an average clause in the policy.
The salvaged goods amounted to Rs.10,000.
Compiled by Dipesh Sir
Acharya Marathe College FYBAF

Find out the amount to be claim to be submitted to the Insurance Company.

Q.8. On 7th November 2013 the premises of Bulbul were destroyed by fire, but sufficient records were saved
from which the following particulars were found :
Particulars Rupees
Stock (1-4-2012) 80,000
Stock (31-3-2013) 98,000
Purchases (FY 2012-13) 6,75,000
Sales (FY 2012-13) 8,10,000
Purchases (1-4-2013 to 7-11-2013) 5,05,400
Sales ( 1-4-2013 to 7-11-2013) 6,25,000

In Valuing the stock for the balance sheet at 31-3-2013 Rs.8,000 has been written off certain stock having
cost Rs.14,000. Half of this goods were sold in May, 2013 for Rs.2,000. The balance is estimated to be worth
60% original cost. Subject to this exception, gross profit had remained at uniform rate. The policy amount
was Rs1,20,000. The stock salvaged was worth Rs.7,500. Show the amount of claim to be lodged with the
Insurance Company.
Q.9. The premises of PQR Limited were destroyed by fire on 15-8-2103. The records, however, were saved
wherefrom the following particulars were available.

Stocks at cost on 31-3-2012 Rs.1,44,000

Stock (as per B/S on 31-3-2013) Rs.1,57,000
Purchases during the year 2012-2013 Rs.7,94,000
Sales during the year 2012-2013 Rs.9,71,200
Purchases from 1-4-2013 to 15-8-2013 Rs.3,41,600
Sales from 1-4-2013 to 15-8-2013 Rs.4,68,000
Returns outward during 1-4-2013 to 15-8-2013 Rs.12,000
Carriage outwards in July 2013 Rs.4,800
Rs.5000 has been written off certain stock, which was a poor selling line, while valuing the stock for balance
sheet as at 31-3-2013. The cost of such stock was 15,000. A portion of this stock was sold in May 2013 at a
loss of Rs.500 on the original cost of Rs.7,500. The balance of this stock was now estimated to be worth the
original cost. Excepting the above, the Gross profit has remained at uniform rate throughout. The stock
salvaged was Rs.10,000. On 10-8-2013, goods worth Rs.4,700 were received by the godownkeeper, but were
not recorded in the purchase account. The insurance policy was for Rs.96,000, with an average clause in it.
You are required to ascertain the amount of loss the stock which was to be claimed from the insurance
company.

Q.10. A fire occurred in the premises of Mr. Rajendra on 15th October 2015.
From the following particulars ascertain the loss of stock and prepare a statement of claim to be lodged with
insurance company.
Particulars Rupees
Stock on 31-3-2013 1,98,000
Stock on 31-3-2014 2,42,000
Purchases for 2013-14 6,40,000
Sales for 2013-14 8,00,000
Purchases from 1-4-2014 to 15-10-2015 6,00,000
Sales from 1-4-2014 to 15-10-2015 7,58,000

The stock on 31st March 2013 was valued at 90% of cost price and 31st March 2014 was valued at 10% above
cost. Salvage was Rs.35,600 the amount of policy was Rs.2,00,000. The claim was subject to average clause.

Compiled by Dipesh Sir