Journal Entry for Goods Lost by Fire

When one is doing business there is always a risk of loss of merchandise due to fire in warehouse. In that case it has to be brought under the books of accounts. Given below is the journal entry for goods lost by fire –

Loss by Fire Account Dr

To Purchase Account

Since it is a loss it is be debited and due to the fire there is decrease in merchandise and that is the reason why purchase account is credited (as you know that when company buys the goods it is always debited to the purchase account)

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