The Problem of Partnership.

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Anuraag Sharma (Querist)

12 March 2008 Here is the question:

A, B, C & D were in partnership sharing p/l in the ratio of 4:3:2:1 respewctively. they decided to dissolve the firm on 31 Dec. 2006, when their B/s was as follows

Liabilities Amt Assets Amt.
Capital
A 7000 Cash 1000
B 4000 Debtors 25000
C 8000 Stock 12000
D 3000 B/R 7000
Bank Loan 10000 Loss 15000
Loan from B 4000
Creditor 24000
....... .......
60000 60000
....... ........

The Assets were realised as follows
a. Debtors Rs. 25,000
b. B/R Rs. 6,000
c. Stock Rs. 9,000
d. B & D were both become insolvent
Give Necessary a/cs in the books of the firm acc. to the Indian practice.

Now my question is

a. what should be the treatment of loss which is given in the question ? In how many of the partners will it be distributed?

b. Is it right to use Garner Vs Murray to solve the problem if not then what is the actual difference b/w Garner vs Murray and Indian Practice.

Ashok Lalwani

Ashok Lalwani (Expert)

13 March 2008 Mr. Anuraag,

here is the solution:

loss (shown in the B/S) distibuted between all the partners in the ration of 4:3:2:1

different between Garner v/s Murrey b/w Indian Practice is just on the view of any loss (reveluation loss) arise due to insolvent of any partner(s), other partner bring loss in cash & according to Garner v/s Murrey the share of loss of insolvent partner(s) bear by other partner(s) in the ratio of their capital.but in Indian Practice, no need to bring loss in cash.

Anuraag Sharma

Anuraag Sharma (Querist)

07 April 2008 thanks Ashok sir. . .