854 – Casualty Losses

Deductions From Income

Synopsis

Account 854

Debits

Credits

  1. Deductible amount on insurance claims.

  2. Property damage and theft losses in excess of insured amount.

  3. Casualty losses for which the retailer carries no insurance coverage.

  1. Adjustments to previously recorded losses.

 

 

Remarks:

This account is specifically created for losses that occur in other than the normal course of retailer business, e.g., a hailstorm that damages several vehicles on the lot and causes financial loss due to a large insurance deductible.  This one-off loss should not penalize specific departments as it is an act of nature and not a normal business occurrence.