Page 76 - Accountancy_F5
P. 76

Solution 2.13

           Step 1: Calculate the value of inventory at the date of accident
           Statement of inventory as at 31  December 2023
                                           st
            Details                                                   TZS                TZS
            Opening inventory (W1)                                                  4,000,000
          FOR ONLINE READING ONLY
            Add: Purchases                                                          8,500,000

            Less: Purchases of plants (capital expenditure)                          500,000
                       LANGUAGE EDITING
            Cost of goods available for sale                                      12,000,000
            Less: Cost of sales:                                11,800,000
 LANGUAGE EDITING
            Sales                                                2,950,000          8,850,000

            Less: Gross profit (W2)
            Closing inventory                                                       3,150,000

           Step 2: Calculate the value of inventory loss (amount of inventory destroyed by fire)

            Details                                                                      TZS
            Amount of inventory on the date of accident                             3,150,000

            Less: Amount of salvage inventory                                         300,000
            Amount of inventory loss                                                2,850,000
           countancy for Advanced Secondary Schools
           Step 3: Calculate the amount of insurance claim since the average clause is in use, then:

                                               Sum insured
            Insurance claim =                                               #  Actual loss
                                 Inventory value at the date of accident

                                   , 2 500 000
                                       ,
                              =              #   , 2 850 000 =  TZS  , 2 261 905
                                                     ,
                                                                         ,
                                       ,
                                   , 3 150 000
                  Insurance claim = TZS 2,261,905
           Alternatively
           Step 1 and step 2 can be combined to form a statement of insurance claim, and then workout the
           amount of insurance claim as follows:














            Student’s Book Form Five
                                                   63




                                                                                            23/06/2024   17:35
     ACCOUNTANCY_DUMMY_23 JUNE.indd   63                                                    23/06/2024   17:35
     ACCOUNTANCY_DUMMY_23 JUNE.indd   63
   71   72   73   74   75   76   77   78   79   80   81