Question
Wonder land Ltd. operates a housing development project.There was a fire on its premises on 31 January 2019 which destroyed most of the building, although
Wonder land Ltd. operates a housing development project.There was a fire on its premises on 31 January 2019 which destroyed most of the building, although stock to the value of Sh.3,960,000 was salvaged.The company has an insurance policy (with suitable average clauses) covering stock for Sh.600,000,000, buildings for Sh.800,000,000 and loss of profits (including standing charges for Sh.250,000,000 with a six months indemnity period).
An extract of the company's trading profit and loss account for the year ended 31 December 2018 is as shown below:
Sh.'000
Opening stock 412,500
Purchases: materials 1,812,500
Insured standing charges 167,500
Other expenses 80,000
Net profit for the year 57,500
Sales of houses 2,000,000
Closing stock 525,000
Interest on investment 5,000
Additional information:
- The company's records show that the sale of housing units for January 2019 had been the same as for the corresponding month in the previous year at Sh.100 million.
- Payments to creditors were Sh.106,680,000 and Sh.3,320,000 was owing to creditors at the end of January 2019.
- Business was disrupted until the end of April 2019 during which period turnover fell by Sh.180 million compared to the same period last year.
- It was agreed that of the value of buildings had been lost and that at the time of fire, buildings were worth Sh.1,000 million.
Required:
Ascertain the amount of various claims to be submitted to the insurers.
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