Question

The following information is extracted from the books of Surabhi Ltd. on 31st July 2017 on which· date a winding up order was made.

Particulars	Rs.
Unsecured Creditors	7,00,000
Salaries due for five months	40,000
Managing Director's Remuneration Due	60,000
Bills Payable	2,12,000
Debtors - Good	8,60,000
- Doubtful ( estimateci to produce Rs.1,24,000)	2,60,000
-Bad	1,76,000
Bills Receivable (Good Rs. 20,000)	32,000
Bank Overdraft	80,000
Land (estimated to produce Rs.10,00,000)	7,20,000
Stock (estimated to produce Rs.11,60,000)	16,40,000
Furniture and Fixtures	1,60,000
Cash in Hand	8,000
Estimated liabilities for bills discounted	1,20,000
Secured creditors holding first mortgage on land	8,00,000
Partly secured creditors holding second mortgage on land	4,00,000
Weekly wages unpaid	12,000
Liabilities under Workmen's Compensation Act, 1925	4,000
Income-tax due	16,000
10,000 9% Mortgage Debentures of RS.100 each Interest payable to 30th June
and 31st December, paid to 30111 June 2017	10,00,000
Share Capital :
40,000 10% Preference Shares of Rs.10 each	4,00,000
1,00,000 Equity Shares of Rs.10 each	10,00,000
General Reserve since 31st December, 2013	2,00,000

In 2013, the company earned profit Rs. 9,00,000 but thereafter it suffered trading losses totalling Rs.11,68,000.
The company also suffered a speculation loss of Rs.1,00,000 during the year 2014. Excise authorities imposed a penalty of' 7,00,000 in 2015 for evasion of tax which  was paid in 2016. From the foregoing information, prepare the Statement of Affairs and the Deficiency Account. 

Answer 1

Particulars	Rs.
Unsecured Creditors as per List E :	7,00,000
One Months' Salaries (4 month's salaries are preferential)	(+)8,000
Managing Director's Remuneration	60,000
Bills Payable	2, 12,000
Bank Overdraft	80,000
Liability on Bills Disdounted	(+)1,20,000
Amount uncovered in respect of partly Secured Creditors
(Rs. 4,00,000 - Rs.2,00,000 value of security of second mortgage on land)	2,00,000
	13,80,000
Preferential Creditors (List C):
Salaries for 4 months	32,000
WeekJy wages	(+) 12,000
Liabilities under Workmen Compensation Act, 1925	4,000
Income Tax due	(+) 16,000
	64.000

Surabhi Ltd.in Liquidation) Statement of Affairs as on 31st july 2017

Assets				Estimated  Realised Value Rs.
Assets not specifically Pledged (List A):
Cash in hand				8,000
Bills Receivable				20,000
Trade Debtors				9,84,000
Stock				11,60,000
Furniture and Fixtures				1,60,000
Assets specifically pledged (List.B) :
Estimated Realisable Value	Due to Secured Creditors	Deficiency ranking as unsecured	Surplus carried to last column
Land10,00,000	12,00,000	2,00,000	-	Nil
Estimated surplus from assets specifically pledged
Estimated total assets available for preferential creditors, debentureholders . secured by a floating charge and unsecured creditors				23,32,000
Summary of Gross Assets :			10,00,000
Specifically pledge			23,32,000
Other Assets			33,32,000
Gross Liabilities	Liabilities		Rs	Rs
10,00,000	Secured creditors (List B) to the extent to which		10,00,000
64,000	claims are estimated to be covered by assets specifically preferential creditors (List C) Estimated balance of assets available for debenture holders secured by a floating charge (List D)
10,07,500	Interest due for 1 month at 9% p.a.		7,500	10,07,500
	Estimated surplus as regards debentureholder			12,60,500
13,90,000	Unsecured Creditors ( List E )			13,80,000
34,61,500	Estimated Deficiency as regards Creditors being the difference between Gross Liabilities and Gross Assets			1,19,500
	Issued and called up capital :
	40,000 10% Preference Shares of Rs. 10 each fully paid (List F)			4,00,000
	1,00,000 Equity shares of RS.10 each fully paid (List G) Estimated Deficiency as regards Contributories (List H)			10,00,000
				15,19,500

Deficicncy Account (List H )

			Rs	Rs
A		Items contributing to Deficiency :
	1.	Excess of Capital and Liabilities over Assets		Nil
	2.	Net dividend and bonus declared during the period		Nil
	3.	Net trading losses after charging depreciation, taxation,interest on debentures etc. (loss  after 2009 Rs.11,68,000 + 7,500 interest on debentures for 1 month)		11,75,500
	4.	Losses other than Trading losses written off or for which provision has been made in the books during the same period:
		Speculation Loss	1,00,000
		Penalty imposed by excise authorities	7,00,000	8,00,000
	5.	Estimated losses now written-off or for which provision has been made for the purpose if preparing the statement:
		Bills Receivable	12,000
		Debtors	3,12,000
		Stock	4,80,000
		Contingent Liability of Bills Discounted	1,20,000	9,24,000
	6.	Other items contributing to deficiency		Nil
		Total A		28,99,500
B		Items reducing Deficiency :
	7.	Excess of assets over capital and liabilities on 31st December, 2013 as shown in the Balance Sheet (General Reserve)		2.00,000
	8.	Net Trading Profits		9,00,000
	9.	Profits and income other than trading profits		Nil
	10.	Other items reducing deficiency - profit expected on realisation of land		2,80,000
		Total (B)		13,80.000
		Deficiency as shown by the Statement of Affairs (A)- (B)		15,19,500