financial accounting

Question 2 Gar, Mur and Wil were partners, in a firm, sharing profits and losses equally. Their capitals were not equal . There was no partnership deed. The firm dissolved on 30th June 2020. The position was as follows, after dissolution: Balance Sheet as of June 30, 2020 Liabilities Assets Gar capital a/c 2500 Cash 1916 Mur capital a/c 314 Wil capital Loss on realisation 635 263 2814 2814 Wil became insolvent and could not pay anything against the capital deficiency. Required A. your response. B. Explain the decision that may be taken due to Wil's insolvency. Show workings to support (8 marks) In such a case, how the deficiency would be treated by the insolvent partner's capital account? (2 marks) Prior to the Garner vs Murray's rule, Mur had raised an objection and claimed that the loss is a capital loss and not a business loss. Therefore, such loss due to capital deficiency of a partner to be borne in capital ratio and not in profit sharing ratio. In court, Mur got the decision in his favour. Explain FOUR (4) points in the Garner vs Murray decision? (10 marks) C. Question 2 Gar, Mur and Wil were partners, in a firm, sharing profits and losses equally. Their capitals were not equal . There was no partnership deed. The firm dissolved on 30th June 2020. The position was as follows, after dissolution: Balance Sheet as of June 30, 2020 Liabilities Assets Gar capital a/c 2500 Cash 1916 Mur capital a/c 314 Wil capital Loss on realisation 635 263 2814 2814 Wil became insolvent and could not pay anything against the capital deficiency. Required A. your response. B. Explain the decision that may be taken due to Wil's insolvency. Show workings to support (8 marks) In such a case, how the deficiency would be treated by the insolvent partner's capital account? (2 marks) Prior to the Garner vs Murray's rule, Mur had raised an objection and claimed that the loss is a capital loss and not a business loss. Therefore, such loss due to capital deficiency of a partner to be borne in capital ratio and not in profit sharing ratio. In court, Mur got the decision in his favour. Explain FOUR (4) points in the Garner vs Murray decision? (10 marks) C