Inventory costing 800 is destroyed by fire and the insurer accepts a claim for 600. What adjustment records the loss?
ADebit Cash 800; credit Inventory 800
BDebit Inventory 800; credit Insurance Receivable 600 and Profit 200
CDebit Insurance Receivable 600 and Loss by Fire 200; credit Inventory 800
DMake no entry until the insurer pays
Correct answer
C. Debit Insurance Receivable 600 and Loss by Fire 200; credit Inventory 800
Explanation
Debit Insurance Receivable 600 and Loss by Fire 200; credit Inventory 800 is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.