X, Y and Z are partners in a business sharing profits and losses equally. Z dies and the firm is dissolved. On the date of dissolution, the capital of X, Y and Z were Rs. 20,000, 15,000 and Rs. 10,000 respectively and the outside liabilities amounted to Rs. 65,000. The total assets of the firm realised Rs. 50,000. What is the amount of deficiency and how the partners shall share such deficiency if the partnership agreement is silent?

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Solution

Solution : Section to which the given problem relates: Section 48(a).
Decision
The deficiency works out at Rs. 15,000 (i.e. Rs. 65,000 - Rs. 50,000).Such deficiency must be shared by X, Y and the estate of Z in their profit sharing ratio.

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