Question

Arya, Bishan, Gaurav and Vishal are partners in a partnership firm with equal profit sharing ratio. On 31^st December, 2015, Vishal become insolvent. The following is the Balance Sheet of the firm as on date:

           Balance Sheet

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
Sundry Creditors	50,000	Sundry Assets	2,50,000
General Reserve	50,000	Gaurav’s Capital Account	50,000
Arya’s Capital Account	1,50,000	Vishal’s Capital Account	50,000
Bishan’s Capital Account	1,00,000
	3,50,000		3,50,000

The assets of the firm realised Rs. 2,00,000 and creditors were settled with full repayment. You have been asked to close the books of accounts as per Garner v Murray rule.

Answer 1

            Realisation Account

                   Bank Account

                  Capital Accounts

Working Notes:

Vishal’s deficiency will be borne by Arya and Bishan. Gaurav does not need to bear the deficiency due to the debit balance in his capital account. The ratio for division of losses is ascertained as under: