Credit the Trading A/c with the full cost of goods lost to keep it out of cost of goods sold, then debit only the unrecoverable shortfall to P&L and show the claim admitted as a Current Asset.

Step 1 — Trading Account. The ₹15,000 cost of goods destroyed by fire is credited to the Trading Account, exactly like Closing Stock, so it is excluded from the cost of goods sold.

Gross Profit = 2,90,000 + 35,000 + 15,000 − 20,000 − 1,80,000 − 10,000 = ₹1,30,000.

Step 2 — Determine the genuine loss. Cost of goods lost (₹15,000) − Claim admitted (₹10,000) = ₹5,000, the unrecoverable, genuine loss.

Step 3 — Profit and Loss Account:

Net Profit = 1,30,000 − 25,000 − 5,000 = ₹1,00,000.

Step 4 — Balance Sheet as on 31.03.2024: