Insolvency Accounts Individual And Partnership Firm BCOM 1st Year Long Notes
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LONG ANSWER QUESTIONS
Q.1. Chandra Shekhar finds himself Insolvent on 1-1-2015. you are instructed to prepare his Statement of Affairs as at that date and the Deficiency Account for the three years ended on that date. The information you are able to obtain as to his position is as follows:
Sundry Debtors (Good * 10,000; Doubtful * 40,500, Estimated to produce 20,000).
Shares in cash Ltd. (estimated to produce 91,000) 1,10,000
Creditors on open account 95,000
Creditors holding a first charge on investments 40,000
Creditors holding a second charge on investments to the extent * 30,000 35,000
B/R discounted (of which 3,500 are likely to be dishonoured) 6,000
Creditors for rent taxes, etc. (* 1,500 are preferential) 3,000
Furniture (estimated to realise 3,000) 4,000
Cash in hand 120
Stock-in-trade (estimated to realise 30,000) 35,880
Bills receivable (estimated to realise 7,000) 13,000
Loss on stock exchange 15,000
He started business on 1.1.2012 with a capital of 50,000. In the first two years, there was a profit of * 27,500 and in the third year there was a loss of 5,000. He has been allowed interest at 6% p.a. on his original capital for each of the three years. Withdrawals for the whole period amount to *26,000.
Out of his withdrawals, he had purchased jewellery for his wife at a price of 3.000. His wife offered Inis jewellery towards paying the debts of her husband. The jewellery is expected to realise * 4,000. ne nas to pay 4,000 for a gambling loss.