[sam103]

The IMO partnership is being liquidated.After all liabilities have been paidand all assets sold.the balances of the partner'scapital accounts are as follows:

Akram,Rs.420,000/- credit balance; Munawwar, Rs,160,000/- debit balance; Owais, Rs,530,000/- credit balance.
The partner's share profits and losses as follows:
Akram , 10% Munawar , 60%, Owais , 30%.

REQUIRED:
If all assets are sold out and all libilities are paid,estimate the cash and tell how it should be distributed and recorded in the general journal.Munawwar is personally insolvent and nothing can be recovered from him.

[morgaine300]

Please read the guidelines for submitting homework in the red print at the top of this forum.

[rehmanvohra]

Following the guidelines, no one will solve the problem for you. However, as a guidance, please refer to the partnership agreement as regards the reported insolvency of one of the partners.

It is not known which country is represented by the question. In India and Pakistan, there is a specific case law called Garner v. Murray. According to this judgment, the deficit of an insolvent partners is assumed by the solvent partners according the ratio of their respective capital accounts, before adjusting any realization gains or losses.

In the United States, it appears that this deficit is shared by the solvent partners in their respective profit sharing ratio.