Question

A, B & C are partners firm. Their capital balances were A - Rs$24,000$, B - Rs$8,000$, C - Rs $4,000$. Their current account balances were: A - Rs$10,800$(Cr.), B - Rs$2,000$(Dr.), C - Rs$6,000$(Dr.). C become insolvent and could not meet his liability to the firm so partners decided to dissolve the firm. Realization loss came to Rs$31,200$. Amount to be paid/ (receivable) to / from A & B on final settlement should be Rs. ______ & Rs. ______ (Apply Garner vs Murray rule)

• A. $25,500$ & $2,900$
• B. $15,100$ & $7,500$
• C. $2,900$ & $25,500$
• D. $45,200$ & $18,400$

Answer 1

Answer: (A)

$25,500$ & $2,900$

Working Notes 1:
Loss on realisation is distributed equally as profit sharing ratio is not given.
Rs. 10400 to each partner.
Working Notes 2:
Insolvency loss of C = Rs.16400 - Rs. 4000 = Rs. 12400 distributed among A and B in their fixed capital ratio i.e.3:1 as per Garner vs. Murray rule.
A = Rs. 9300
B = Rs. 3100