Insurance Receipt

Yazi

(Thought I had posted this but cannot see it anywhere so here it is again!
Sorry if two appear later....)


Hi

Can anyone help with this one please.

Courier delivered a laptop to customer. They managed to smash it. Will not pay out so we claimed from insurance. A new laptop had to be purchased by our firm. Now we have received the claim money (less the excess) and I 'think' I post this as a receipt to Purchases.

Anyone agree?
If not, what is the correct procedure.

Thanks in advance.
Yas

CathG

Would you post it to the asset account - this would credit the payment for the first laptop purchased?

Yazi

Thanks for your reply.

It was not a company asset.

It was a laptop bought by the customer and delivered to our company for "Tweaking" then the courier, booked by us, was used to deliver the laptop to the customer. The courier broke it and our company had to replace the laptop which was entered as a Hardware Purchase.

Insurance money now received as a Bank Receipt, so my theory is to enter the receipt against the purchase.

mark057

My opinion

Hi Yaz,

If the laptop was sent by your business to a customer then you will probably have to treat the receipt from the insurer as follows:

Dr - Cash book with the receipt from the insurer
Cr - Insurance account (create a new account if necessary)

The purchase of the new laptop should just be recorded as normal:

Dr - Purchases account
Cr - Cash book

The purchase of the original laptop and payment fot it still stands because you never received a refund from the supplier.

Hope this helps.

Mark

Yazi

Hi Mark

We did not pay for the original laptop.
The customer paid for it and it got delivered to us for tweaking then we sent it on to the customer.

So we paid for the replacement only and now have part amount back from insurance, so I thought the receipt should go against the purchase.

Thanks

mark057

Reply

Hi Yaz,

The amount of money you received from the insurer should still be:

Dr - Cash book
Cr - Insurance account

Then the replacement you paid for from the company would be:

Dr - Purchases or a relevant expense account
Cr - Cash book.

These are two seperate transactions even though the events are interlinked. Surely your company paid for the replacement laptop before the insurance claim came through.

To offset the insurance proceeds as a credit into the purchases account makes it look like a purchases return, which it is not technically. By credting the receipt of insurance money into a specific insurance account shows transparency in the accounts.

Yazi

Hi Mark

Thanks for your reply.

That makes sense.

Thanks
Yas

Yazi

Sorry one more question

Would you put this as T0 or T9 tax code?

Thanks