Raj & Company has been dealing with reputed company's TVs. They are the agents of many company's TVs. They offer instalment systems payments which attracts customers and their turnover has been improving. They have a

The Insurance Company has handed over to us to audit the claim preferred by Raj & Co. All records are completely destroyed along with TVs. The only material available was the parallel stock ledger at the office. After ascertaining the details of their business, we started gathering the information of quantity purchased during the past six months and the sales effected. On going through the records of parallel register, it is observed that average sale of TVs during the past six months was 20 numbers and the purchases also an average of 20 to 25 numbers. The credit period allowed by the supplier was 30 days and customers are paying through installment and it is also seen cash sales. Raj & Co. says there is a sales drive to earn incentive and sometime they purchase increased quantity and stock in the warehouse so that they do not enter into a stock out situation and therefore, they stock in the warehouse more than 50 TVs. On going through purchase details and sales pattern, bulk purchase of 40 or 50 numbers had not taken place but still their contention is that they had 50 TVs in the warehouse on the day of the outbreak of fire. Not being satisfied with their explanation, we have decided to inspect the warehouse. It is a small warehouse and considering the size of TV boxes, stacking norm permitted is only three boxes in a column and vacant space needed for human movement. Taking into consideration the storage volume for each model and the space required, they can store the warehouse only 8 columns and the number of TVs cannot exceed at best 24 numbers. When these queries were put up, they were shocked and accepted to reduce the claim unconditionally. It is now left to accept the claim or not since claim was inflated.