a is average clause WIAL IS no purpuoer save vs oe a a wy yuu vumnputy viet nur moe ve jo you deal with ‘Abnormal items and ‘Abnormal practices’ in computation "aim for loss of stock? te pat is meant by ‘Consequential loss policy’? What factors i ’ weetion of claim under this policy? Semen peseribe the method of computation of claim under ‘loss of profits” policy. , Write & detailed note on different ‘Turnovers‘. ‘standing changes’ and ‘special circumstances clause’ in the context of loss of profits claim. i Exercises Bi = S = e Claims for Loss of Stock When gross Profit Ratio is given 1. A fire occurred in the premises of a merchant on 15.6.19 and a considerable part of the stock was destroyed. ‘The value of stock saved was Rs. 4,500. The books disclosed that on 1.4.19 the stock was valued at Rs. 36,750. The purchases to the date of the fire amounted to Rs. 1,04,940 and the sales Rs. 1,56,500. On investigation ‘it was found that during the past five years the average gross profit on sales was 36%. Calculate the claim to be made. [Madras, B.C.S (Sem-old-SY1A) Nov. 2004; B.B.M. Oct. 2004 (2 Times); B.Com. September 1999] [Ans: Amount of claim Rs. 37,030} 2. A fire occurred on 31.12.13 in the premises of a firm, From the books which were saved from fire, it was ascertained that: Rs. Sales from 1.1.13 to 31.12.13 12,80,000 Purchases from 1.1.13 to 31-12.13 8,40,000 Stock on hand 31.12.12 2,36,000Financial Accounting fale of stock -d at 35% on sales. The vi se rata statement Showing the amount of the 12.29 Gross profit for the past five salvaged was agreed at Rs. claim. There was no average clause, nae, Cons CE) Wa BGm, PzA) q Non 200085; B.Connt, Oot et, Now 2008; BCS (Non Sm -PZA) Nov. 2004; 1) Fiat parce 3, _Afire occurred on 25.4.19 in the premises ofa company. ron Br calc aa certain the amount of claim to be lodged in the case of '088 insured. = - Stock on 1.1.19 1,25,000 Purchases from 1.1.19 to date of fire 5,00,000 Wages 1,00,000 Manufacturing expenses 50,000 Sales from 1.1.19 to date of fire 7,50,000 ‘The Gross profit ratio is 15%. The stock salvaged was estimated at Rs. 37,500. (Madras, BCS. (em -—SY1A) April 2004; B.Com, (Non sem) April 2003; B.Com, Apr 1980] [Ans.; Amount of Claim Rs. 1,00,000) 4. Afire occurred on 1.9.13 in the godown of Mr. Ganesan, From the following particulars find out the claim to be lodged: Rs. Stock on 1.1.13 25,300 Purchases from 1.1.13 to date of fire 50,400 Sales from 1.1.13 to date oftfire 1,56,000 Manufacturing expenses and wages 60,000 Goods taken by Ganesan at cost 2,500 The rate of gross profit on cost is 30% Value of salvaged stock 3,600 tadras, B.Com.(PZ1A) Nov. 2006; Pertyar, B.Com., April 2004; Madras, B.Com, May 1996] [Ans: Amount of claim — Rs, 9,600] Hint: GP, 30% on cost or 30/130 on Sales, A fire occurred in the premises of Aruna & Co. on 1-4-20) destruction of stock. From the following particulars ascer be lodged in case of the loss of stock which was insut i) ii) iii) 17 and resulted in a major rtain the amount of claim to ed: Purchases from 1-1-17 to the date of fire Rs, 2,10,000, Sales from 1-1-17 to the date of fire Rs. 3,20,000 Wages paid from 1-1-17 t Of Rs. 3,000 paid for alg cee a Closing stock as on 31-12-16 Rs. 60,000 Carriage Inward for the period from 1-1-17 to 1-4-1 ,000 (including wages i on 1-3-17), vy) 17 Rs. 5,000.7 yrance Claims a ae | Fee carriage Outward for the parod fom 11-17 8 Tay Wa Yi vii) Gross profit ratio on sales for the lant three yeurn were wx fillowy 2014 — 20%; 2015 25%; 2016» 24% vii) Value of goods salvaged Rs, 600, ix) licy amount for los of stock du 4 fre Ms, 92,000, 1) Average clause is applicable, (Baroda, B.Com, June V7 [Ans: Average gross profit ~ 29% Stock destroyed ~ Rs, 40,000; Chaim ~ tts, 34,5275 «Are broke oti the warehouse of Bad Luck Lon 30h Sep, 2014, The dompany A resto file acaim with the insurance company for loss of stock and gives you the following information to enable you to prepare a statement of the amount to be claimed. (1) The last accounts of the company were prepared on 31-12- 2013. Rs. (2) Sundry debtors on 31.12.13 80,000 (3) Sundry debtors on 30.9.14 60,000 (@ Cash collected from debtors 2,88,000 (5) Stock on 31.12.13 30,000 (6) Sundry creditors on 31.12.13 2,00,000 (7) Sundry creditors on 30.9.14 4,00,000 (8) Cash paid to creditors 40,000 (9) Goods returned to creditors 10,000 (10) Rate of gross profit to sales 20% : are the necessary accounts, showing all your workings to arrive at the amount ofclaim. [Ans: Amount of claim Rs. 65,600; Sales 2,68,000 ; Purchases Rs. 2,50,000] Hint: (i) Prepare total debtors A/c to find out sales. (ii) Prepare total creditors A/c to find out purchases. 7. On 3th July 2016, a fire occurred and partly destroyed the goods of KCP Corporation. The cost of the salvaged goods was Rs. 20,000, The following particulars could be obtained from the books: Rs. i) Balances as at 31-3-2016 Stock at cost {rag.000 Creditors for. goods 10.000 ii) Transactions between 1-4-16 and 13-7-16 were as follows: Payment to creditors for goods 62,000Financial Accounting 2,000 Returns Outwards @a06 Returns Inwards 9,000 Carriage Inwards aio Carriage Outwards bid Sales (iii) Unpaid creditors for All sales were made at a profit of purchases and sales. The policy va in the policy. You are required to draw up a statement of elaim for loss of stock on facts in the books of KCP Corporation. goods as on 13-7-16 amounted to Rs. 8,000 £3317, % on selling price. There were no other ‘ue was Rs, 90,000 and there was average clause the basis of the JACS. Inter, June 1988] [Ans: Credit purchases — Rs. 62,000; Gross profit — Rs. 34,500; Stock destroyed Rs. 1,20,000; Amount of claim— Rs. 75,000] When Gross Profit Ratio is not given 8. The premises of a merchant caught fire on 1.10.12 and his stock was damaged. The stock was fully insured. The merchant had made up his accounts to 31st December ‘each year. The following information was available. Rs. Stock on 31.12.11 26,544 Stock on 31.12.10 19,228 Purchases from 1.1.12 to the date of fire 70,000 Purchases upto 31.12.11 90,516 Sales upto 31.12.11 1,04,000 Sales from 1.1.12 tothe date of fire 1,00,000 Additional information:- 1) InMay 2012 goods costin samp 2 1g RS. 5,000 were gi stn Soy aa 2) During 2012, a clerk ha : Rs. 2,000, 4 misappropriated unrecorded cash sales » ‘The rate of gross profit is constant, 1) The stock salvaged was Rs, 1,500 From the rom the above information calculate the amount of claim, sie. (Ans. GP Ratio = 20%, Claim — Ra.8,444 Asin Tr ca fon Now 32012 olin. ~ : format ined from the books me and records sal; Stock on 31-12-2010 ah ns Stock on 31-12-2011 si Purchases during 201) sm 4,75,000—_ punting other lause vfthe 988) 00] ge Claims « ¢ Insurance 2 eles from JanitO NOVISI2012 ia bor (heey Purchases from Jan. to Nov. 3 2012 4,40,000 Sales during 2011 5,87,500 Assuming that the rate of gross profit on sales has been the same in 2012 as i «estimate the value of the stock in the godown at the time of fire, eee ‘ (Madras, B.Com., Sep. 19971 {Ans: Gross Profit Ratio -2011 = 20%; Stock on the date of fire - Rs, 1,70,000 10, Fite occured in the premises of Reckless Ltd. on 20th February 2014. All stocks destroyed except tothe extent of Rs, 19,800, From the following figures, ascertain the joss of stock suffered by the company. Rs. Stock on 1.1.2013 1,00,000 Purchases during the year 2013 3,65,000 Purchase returns during the year 2013 5,000 Stock on 31.12.2013 1,40,000 Sales for the year 2013 4,10,000 Sales returns during the year 2013 10,000 Purchases from 1.114 to date of fire 84,000 Sales from 1.1.14 to date of fire 1,03,000 Sales returns from 1.1.14 to date of fire 4,000 [Ans: GP. Ratio in 2013: 20%; ‘Amount of claim Rs. 1,25,000] On 1.4.2012, an accidental fire completely destroyed the stock of Mr. X. However, from the various records available from his chartered accountant, the following information was obtained from which you are requested to prepare a statement showing the amount of claim to be lodged. Stock at cost Rs, Purchases:- Rs. Lat 90,000 Calendar year 2011 2,58,500 11.12 1,10,000 Three months to 31.3.2012 1,20,000 Sales: Manufacturing Expenses Calendar year 2011 3,40,000 Calendar year 2011 42,000 Period upto the date ‘Three months to 31,3.2012 ? of fire in 2012 2,00,000 In February 2013, goods valued at sale pric samples. Manufacturing expenses were normal Stock salvaged was estimated at Rs. 14,000. ¢ of Rs. 10,000 were distributed as lly found to be constant. ‘The value of [Bombay, B. Com., 1971 adapted] [Ans: Gross profit Ratio: 17.5%; Stock on the date of fire Rs. 75,500 5 Claim - Rs. 61,500]Financial Accounting jonately = Factoring expenses for 2012 have been calculated proport a) Manu go © 75 months atin 2017 a igures relating to samples belong to the y aa spvemoe in the years of ie Le. 2012, 5 mnt " 20th March 2015. All stocks in sompany On h , tae ourein te gow cane on 2 pus tn destroyed except to: ‘laim amount in respect of loss of stock by fire: Rs. 40,000 Stock on 1-1-2014 ee Purchases during 2014 yee Sales during 2014 ie Stock on 31-12-2014 Purchases during 2015 upto the date of fire 1,46,000 Sales during 2015 upto the date of fire 1,60,000 Stock was always valued at 80% of the cost (Madras, B. Com., Sep. 1997] [Ans; Gross Profit Ratio - 20%; Amount of claim — Rs, 35,000] 13, Goods of Rs, 80,000 of M/s Raju & Sons are insured for Rs. 70,000 subject to average clause. Loss due to fire is assessed at Rs. 16,000. Calculate what claim the insured will ‘get from the insurers, (Madras, B.Com., Sep. 1985] [Ans: Amount of claim — Rs, 14,000] 1M. A trader has his stock insured against fire. Subsequently a fire destroyed a part of the stock which was valued on the date of the fire at Rs, 60,000. The stock wre insured pubect to average clause, Stock salvaged was Rs. 12,000. Stock was insured for Rs. 36,000. Calculate the claim, (Madras, B.Com., March 1990} [Ans: Amount of claim — Rs, 30,000] Hint : Stock on date of Fire Rs. 72,000 (60,000 + 12,000) Under Valuation of stock and Average clause 15. A fire occurred in the bus siness premises of Thiry. P Beaten \. Fonnusamy on 15.10.19. From the ‘certain the loss of stock and Prepare a claim for insurance: Stock on 1.1.18 a Purchases during 2018 1.22, Sales during 2018 ad Stock as on 31.12.18 Ta Purchases from 1.1.19 1014.10.19 1 en - Sales ffom 1.1.19 10 14.10.19 jas stocks were al D ee s.18,000, * M498 Valued a 90% of cost. The Stock saved fy fom fire was worthpy pire Insurance Claims 24 “Fhe amount of policy was Rs, 63,000. There w fn average clause in the policy. Madras, B.Com., April 2005; Apri 1999; Mar. 190 [Ans: Gross Profit Ratio 30% ; Stock on the date of fire Ra, 72,000, Actual loss of stock = Rs. 54,000 ; Claim ~ Rs. 47,259) 16, The Premises and stock of Kamatchi Stores were totally destroyed : From the accounting and other records that were saved, the Bie available 2011 2012 2013 2014 Rs. Rs, Rs. Rs, Opening stock 2,709 3,240 3,600 3,690 Purchases less returns 7,490 8,000 8,100 0 Sales lessretums 12,000 13,200 14,000 1,200 Wages 1,740 1,900 2,090 200 Closing stock as valued 3,240 3,600 3,690 - ‘The stock has always been valued at 10% less than cost, Prepare the statement of claim. (Madras, B.Com. Oct. 2002 (10 times)} [Ans: Rate of Gross Profit: 28%; Claim - Rs. 4,036] 17, Fire occurred in the premises of X Ltd. on 10.10.2014, All stocks were destroyed except to the extent of Rs. 6,200. From the following figures ascertain the loss suffered by the company. Rs, Stocks on 1.1.13 36,000 Purchases less returns (during 2013) 1,453,000 Sales less returns (during 2013) 2,00,000 Stock on 31.12.13 22,500 Purchases less returns during 2014 upto the date of fire 1,486,000 Sales less returns during 2014 upto the date of fire 1,89,000 Itwas the practice at the firm to value stocks at cost less 10%. Early in 2014, prices were raised by 5%, [Thiruvattuvar, B.Com., April 2004; May 89; Periyar, B.Com., Now. 2005] 25 New GP, Ratio= jg “23.81% [Aus: Claim: Rs, 20,800; Old GP. R. = 20 cn ing its stock in '8. Bombay traders have taken out a fire policy of Rs. 8,00,000 mane 8 = ttade. A fire occurred on 31st March 2013 and stock was spare Bee er of that worth Rs, 2,06,800. The following particulars are avail accounts of the firm:Financial Accounting 12.35 fa 3,00,000 Stock on 31st Dec, 2012 ee Purchases to the date of fire Se Sales to the date of fire o i ‘Commission paid to the purchase manager ‘on purchase GG Carriage paid on purchases a fo fit on cost ree red to calculate the amount of ‘The policy was subject to average clause. You are req claim to be made against the insurance company. Madras, B.Com., (Sem — old - PZ1A) Nov. 2003 1/10 Figures: B.CS. (Non sem) Nov. 2004 (1/2 Figs) Mysore Univ. B.Com., Adapted] [Ans: Stock on the date of fire — Rs. 10,34,000; Amount of Claim— Rs. 6,40,000} [Hint: No commission on carriage] 19. On the night of 31.12.2016 the godown of a businessman was burnt to ashes. From the records of the business the following information could be gathered. Accounting Year Sales Gross Profit Rs. Rs. 2014 6,00,000 1,80,000 2015 6,60,000 1,98,000 2016 6,48,000. 7 ‘The opening stock of goods as on 1.1.16 was Rs. 1,65,000 and purchase during the year 2016 amounted to Rs. 4,60,000 ‘You are required to find out the estimated value of stock as on 31.1 2.16, on some reasonable basis to support the claim on insurers. (Madras, B.Com., March 1988] [Ans: GP. : 30%; Claim — Rs. 171,400} Treatment of abnormal lines of stock eer 20. On 15.9.2012 the premises ofa concem were destroy e yyed by fir ici were saved from which the following particulars were See ao Stock at Cost 1.4.11 Stock at Cost 31,3.12 oe 79, Purchases less returns, year ended 313.12 a oe Sales less returns year ended 313.12 ri ce Purchases less returns 1.4.12 to 15.9.12 aioe Sales less returns 1.4.12 to 159.12 ae 231,200— re Insurance Claims fi ing stock for Balance Sheet at 31,3.12, Rs. 2,300 had stock WI ich was a poor selling line having cost Rs. 6,900, A portion of these 22, In been written off certain ‘vas sokd in June 2012 at a loss of Rs. 250 on the original cost of Rs. 3,450. The remainder of this stock was now estimated to be worth the original cost. Subject to the above exception, gross profit had remained at an uniform rate throughout. The stock salvaged was Rs, 5,800, [An [Hints: Sales from the abnormal stock: normal stock: Rs. 2,31 A fire on Oct 1, 2014 destroyed Show the amount of the claim, Gross Profit Ratio: 20%. ; Stock on the date of fire: Normal items — Rs. 54,600; Claim —Rs. 52,250: Abnormal items — Rs. 3450 's. 3,450 — Rs. 250 = Rs, 3,200; Sales from ,200 — Rs, 3,200 = Rs. 2,28,000} the stock of a firm. The business records were saved ‘and from them the following particulars were ascertained: Rs. Stock at cost on 30.4.2013 44,300 Stock at cost on 30.4.2014 37,550 Purchases for the year to April 30, 2014 1,03,850 Purchases from May 1, 2014 to Sept. 30, 2014 37,350 Sales for the year to April 30, 2014 1,52,500 Sales from May 1 2014 to Sept. 30, 2014 50,000 In valuing the stock on 30.4.2014, Rs. 800 had been written off a particular line of goods which had originally cost Rs. 1,800. They were sold in June 2014 for Rs. 1,750. Except as regards this transaction the ratio of gross profit has remained unchanged throughout. The val Calculate the amount of claim. Jue of stock salvaged was Rs. 5,100. ([Madras, B.Com. April 1976] [Ans: Claim — Rs. 34,060 Gross profit ratio - 28%] The whole of stock of goods of Ram Gopal & Co. was destroyed by fire on 3rd February 2013, No Stock register was maintained but the following particulars were available: Rs. Stock at cost on 1.1.12 26,580 ‘Stock as per Balance Sheet as at 31.12.12 22,530 Purchases for 2012 62,310 Purchases from Ist January to 3rd February 2013 229410 Sales for 2012 91,500 Sales from 1.1.12 to 3.2.13 aedFinancial Accounting i rice of ‘While valuing the stock as on 31.12.12 Rs. 780 was written off out of the cost price o Rs, 1,080 and this stock was sold in January 2013 ae Tr al et : rat i . The value of d ie ne yee ‘inst fire. Calculate the amount of claim. fully insured agai SE aren [Madras, B.Com., March 1987] [Ans: GP. Ratio — 28%; Claim — 16,545] i i Ltd. All the stocks on 26th June 2014, a fire broke out in the premises of X company en viestroyed except some which were partly damaged and sold subsequently for 1237 Rs. 7,900. From the following particulars ascertain the elaim to be submitted to the Insurance company assuming thatthe policy was for Rs. 20,000. if Stock on 1-1-14 24,400 Purchases upto the date of fire 73,000 Sales upto the date of fire 97,000 Purchases during the year 2013 1,53,500 Sales during the year 2013 1,96,500 ‘Stock as on 1-1-2013 18,500 The stock as on 1-1-2013 included a special item valued Rs. 5,600 which was sold at profit of 20% on sales. A part of this item was sold in 2013. While the balance was sold on 3rd May 2014 for Rs. 2,500, Except for this item, the gross profit on all other items was at an uniform rate throughout the period. [Madras, B.Com., Oct. 1997] [Ans: Gross Profit Ratio — 25%; Stock on the date of fire — Rs. 24,525; Profit on sale of special item (2014) — Rs. 500; Claim — Rs. 13,558] 24, Bee & Co. suffered loss of stock due to fire on May 16, 2015, From the following, information, prepare a statement showing the claim to be lodged. Rs. Stock on 1.1.14 38,400 Purchase during 2014 1,60,000 Sales during 2014 2,02,600 Stock on 31.12.15 Purchases from 1.1.15 to the date of fire ac Sales from 1.1.15 to the date of fire 61,400 a a in 2013 at a cost of Rs. 10,000 was valued at Rs. 6,000 -12.13. Half of this stock was sold in 2014 for Rs. 2,600. Th ining sc . 2,600. The remai eee a) eae bia 2014, ‘One fourth of the original stock Sein po ee i 400. The remaining stock was considered to be worth 60% oe one st. The salvaged stock was Rs. 12,000. The amount of the oe = ,000 and there was an ayerage clause in the Policy. oa (Madras, B.Com., Sep. 1987} ‘s IAns: Gross Profit Ratio: 18.5%; Actual loss a ~Rs. 24,000 ; Claim to be lodged: — Rs, 20, 000]Fraanment of stock destroyed by fire in previous year «Fire occurred in the premises of Selvi & Co. on 1.4.2011 and a considerable part of : their stock was destroyed. The stock salvaged was Rs. 56,000, A fire rcp a for Rs. 3,42,000 was taken to cover loss of stock by fire. You are required to ascertain the insurance claim from the following particulars:- Purchases for the year 2010 5 ea Sales for the year 2010 23,20,000 Purchases from 1.1.11 to 1.4.11 3,46,000 Sales from 1.1.11 to 1.4.11 4,80,000 Stock on 1.1.10 2,88,000 Stock on 31.12.10 4,84,000 Wages paid during the year 2010 2,00,000 Wages paid during 1.1.11 to 1.4.11 54,000 Fire also broke out on 21.12.10 and destroyed stock of the estimated cost of Rs. 1,00,000. There was a practice in the concern to value stock at cost less 10% but all ofa sudden this practice was changed and stock on, 31.12.10 was valued at cost plus 10% (Madras, B.Com. Nov. 2001; Madras, B.Com. Mar. 1993] [Ans: G P, Ratio = 20% Stock on date of fire = Rs. 4,56,000 Claim = Rs. 3,00,000} [Hint ; Stock destroyed by fire on 21-12-10 to be shown on the credit side of Trading account for 2010 separately, to ascertain the normal gross profit ratio of 2010.] 26. Fire occurred in the premises of X & Company on Ist September 2015 and stock of the value of Rs, 1,01,000 was salvaged and the business books and records were saved. The following information was obtained: Rs. Purchase for the year ended 31-3-15 7,00,000 Sales for the year ended 31-3-15 11,00,000 Purchases from 1-3-15 to 1-9-15 2,40,000 Sales from 1-3-15 to 1-9-15 3,60,000 Stock on 31-3-14 3,00,000 Stock on 31-3-15 3,40,000 Further information is also given that the stock on 31-3-15 was over valued by Rs. 20,000, Calculate the amount of claim to be presented to the insurance company in respect of losses, Rate of gross profit is to be based on the year enced 31-3-15, (C.U. B.Com., Hons.] {Ans: Rate of gross profit in 14 to 15 ~ 38.18% : (approx); Claim — Rs. 2,33,540] [Hint: Figures for purchases and sales include those for March 15. So,'/,th has to be eliminated]me ae Dt SE INP LOUK 1239 Claims for loss of profit Piet bias ‘ f x Co. Ltd. On.! 27. Fre occurred in te PO of Bad Luck Co" tre Company were reduced to i onths during which the sal oe ee Oe y ite account on oth June every Year pera pad en. THe company close reer ig given below: “The Profit & Loss A/c for the year ended 30th Profit & Loss Ale for the yen pass 300 Sales Cot Particulars ‘Amount Particulars i st Fo Opening Stock §,00,000 | By Sales 47,50,000 To Purchases 30,00,000 | By Closing Stock 2,50,000 “To Variableexpenses 7,87,500 To Standingcharges _3,62,500 To Net Profit 350,000 a 50,00,000 50,00,000 “The company took a loss of profit policy for asum of Rs. 6,00,000. The sales of the cae on forthe 12 months ending the date of fire were Rs. 90,00,000 and for the 4 months from 1.11.2009 to 28.2.2010 were Rs. 15,00,000. Jn was noted that the sales forthe first four months of the year under indemnity were 20% higher than previous year. Compute the claim for loss of profit. [Madras, B.Com., Nov. 2004; April 2004] [Ans: Loss of profit Rs. 240,000; GR. Ratio= 15% Amount of dim foros of profit= Rs.1,60,000) 28. On) 9. 2010 a serious fire occurred at the premises of Reckless Ltd. and interrupted ‘their business activities until 31.12.2010, when normal trading conditions were re-established. Reckless Ltd. is insured under loss of profit policy for Rs. 84,000, the period of Indemnity being six months. Ascertain the following information:- ) (1) The Net Profit for the year ended 31.12.2009 was Rs. 40,000. (2) The annual insurable standing charges amounted to Rs, 60,000 of which Rs. 4,000 were not included in the definition of insured standing charges under the policy. (3) The addin ing | iti att ional co wang ip Lied 10 mae the damage caused by the emareed 1 7, for this expenditure, the business would (4) The savings in it ir me ee standing charges in consequence for the firm amounted. (5) The turnover for the peri he periods of four months ended Apri and December 31 in each of the 2009 and 2010 was ia a Year Rs. : 2009 ye Rs, 1,30,000 1,60,000 ie 2010 1,40,000 faces 1,90,000 > LY 3 fe beets) aun peel Afi Accounti ‘You are required to compute the relevant claim usviae‘ha t 30,0004 > Ll «, ud 29.= se nsurance Claims a re ICA. Final} . [Ans: GP. Ratio = 20%; Claim for Reduction in turnover = Rs, 32, as . Claim for increased cost = Rs. 6,000, Amount of Claim = Rs, 30,000} |. rao the following information, ou are required to work outthe claim | ™ ‘Fprofit insurance policy. under the loss (a) Indemnity Period — 6 months {b) Cover - Gross Profit Rs. 10,000 ! ! (@) Damage due to a fire accident on 28th May. Accounting year ends on 3ist December, {) Net Profit plus all standing charges inthe prior accounting year Rs. 15,000 (e) Standing charges uninsured Rs. 2,500 (O) Tumover of the last accounting year was Rs, 50,000, The rate of gross profit being 25%. (@) The annual tumover namely the tumover for 12 months immediately preceding the fire Rs. 52,000 (h) As a consequence of fire, there was a reduction in certain insured standing charges at the rate of Rs. 2,500 per annum. (i) The standard turnover was Rs. 26,000 {) Increased cost of working during the period of indemnity were Rs. 2,000 () Tumover during the period of indemnity was Rs. 10,000 and out of this tmover Rs. 8,000 was maintained due to increased cost of working. [C.A. Inter adopted} (Ans: Final Claim: Rs. 3.398] 30, From the following particulars find the claim to be lodged under loss of profit policy. Loss of Profit Policy amount Rs. 21,00,000 Indemnity Period ees Fire occurred on 313.18 Sales particulars are as follows: Rs. : Sales for the year ending 31.12.17 70,00,000 Sales from 1.1.18 to 31.3.18 10,00,000 Sales from 1.4.17 to 30.6.17 18,00,000 } Sales from 1.4.18 to 30.6.18 1,20,000 } Standing charges for the year 2017 ‘ 16,00,000 | Profit for 2017 sou Savings in standing charges because of fire a ‘Additional expenses to reduce the loss of turnover ; (Assume no adjustment has to be made for the upward trend in rete) as ([Bharathiar, B.Com, April 1994; Bharathidasan, B.Com., Ap! IAns: GP. Ratio : 30%; Short sales- Rs: 16,80,000; Claim for loss of profit — Rs. 5,04,000; Final Claim — Rs- 4,90,000 Average clause does not apply]== Financial Accounting a following compute: claim for consequential 105s: a 31. From the Financial year ending 31st December 2011 turnover Rs. 4,00,000 Indemnity Period 6 months Period of interruption 1st July to 318t October 2012 Net Profit Rs. 36,000 Standing charges Rs. 84,000 out ‘of which Rs. 20,000 have not been insured, ‘Sum assured Rs. 1,00,000 ‘Standard turnover Rs. 1,30,000 ‘Turnover in the period of interruption sn rented place at Rs. 1,200 per month. ‘Annual turnover is Rs. 4,80,000 Rs, 50,000 out of which Rs. 12,000 was from Saving in standing charges Rs. 9,450 a Twas agreed to between insurer and the insured that the business trends would lead i a ‘ton increase of 10% in the tumover. 1 In [Madras, B .Com., (Sem-Old-PZ1A) Nov. 2003 > Figures] i a Ans: Percentage of G P. on turnover: 25%; Claim for Reduction in Turnover Rs. 23,250; Claim for increased cost 12,000 x 25/100 = 3,000; é otal Claim Rs.16,800;Final Claim (After Average Clause) Rs. 12,727] P ‘32. A firm has decided to arrange for a loss of profits insurance and you are required to T finalise the sum tobe insured ona full insurance basis from the following figures for a ‘the last financial year. It is anticipated that for the current financial year, turnover will s ‘increase by 10% and that all standing (fixed) expenses will remain unchanged. ‘a ‘ Rs. Rs. I Total Variable Expenses 42,00,000 - Fixed Expenses: “Wages & Selaries to skilled employees and 7 ‘Selarics 10 administration staff 6,00,000 ; Depreciation ofall fined ussets 2,00,000 Insurance Premium 20,000 ; ‘Audit Fees 2,000 Director's Fees 2,000 ‘Travelling expenses (including motor car Postage, Cables & Telephones “on ‘Trade Subscriptions 2,000 Rent, Rates & Taxes , 60,000 9,84,000 ‘Non-operating Income — Net 1,00,000. 8,16,000 ‘Ans: Sum to be insured Rs, 18,70,000)