Q1. Flooded by a series of misfortune George Temu files his petition for bankruptcy and R/O is made on him on 30th June 2010. The following information is available; a) His business assets on this date are as follows; Book values ERV Motor vehicles 39,800 21,500 Furniture and fittings 27,400 10,000 Stock in trade 49,800 56,500 Trade debtors 39,600 24,800 Cash in hand and at Bank 7,200 b) A loan secured from TIB at 6% interest on the security of the M/V, was outstanding on this date at shs. 20,600 c) Other business liabilities include; shs 36,200 due to creditors, out of which a claim for shs 2,400 is statute barred. Shs. 9,200 due to Mrs Temu being the amount advanced by her for meeting workers salary for June 2010 Shs 9,200 as salaries to workers for June 2010 Shs. 5,400 due to general manage as his salary for the three month to 30th June 2010 Shs. 650 due to telephone and electricity bills Shs. 350 due as interest on TIB loan. d) In the event of cessation of business shs. 24,500 will become payable to the employees as compensation. e) Net trading loss and household expenses of Temu, who had no other source of income, inrespect of the year to 30th June 2010 amounts to shs 13,800 and 19500 respectively. f) Temu personal liabilities on this date consist of Shs. 24,800 due in respect of gambling debts Shs. 3,100 due in respect of liquor bill Shs. 8,500 due as medical bills Shs. 26,300 due as income tax made up as follows Year of assessment Income tax Interest Assessment 2006 11,400 1,900 06.10.2007 2007 8,000 700 14.07.2009 2008 2,500 01.02.2010 2009 1,800 Estimated g) A NBC loan guaranteed by Temu for a friend is outstanding at shs 27,200 h) Only personal assets owned by Temu on this date consist of Music centre expected to realize shs 7,500 Furniture expected to realize shs 6,000 Life policy having surrender value of shs 6,400 Bedding and wearing apparel shs. 5,000 You are required to prepare the Statement of Affairs and the Deficiency Account of George Temu. Q2. Mwakibete of Kareli suffered a series of misfortunes and was unable to meet his maturing debts obligations. Following a creditors petition, a R/O was made on him at the end of April 2005 and he was subsequently adjudged bankrupt. The following is a list of his assets and Liabilities for his business, Kareli New Life Bar, as at 30th April 2005; Book Values ERV Shs Shs Land and Building 1,125,000 1,325,000 Motor vehicles 750,000 650,000 Cooling equipment 500,000 375,000 Furniture and fittings 425,000 297,000 Current assets Stock in trade 45,000 20,000 Debtors 987,500 650,000 Cash and bank balance 75,000 Current liabilities Trade creditors 500,000 Expense creditor 600,000 Wages and salaries 50,000 Tax payable 125,000 Other balances: Drawings for the year 360,000 Long term Loans: Igurusi Credit union (secured on Land (building) 1,500,000 Karadha Ltd (secured on Motor vehicles) Loan 500,000 12% interest 60,000 560,000 Tanzania Oxygen Ltd (secured on Cooling equipments) Loan 400,000 10% interest 40,000 440,000 You ascertain that Mr. Mwakibete made a loss of shs 250,000 during the year ended April 2005. In addition you are informed that: i. Expense creditors include local government rates for two years at shs. 5,000 per annum. ii. Tax payable includes shs 60,000 which is preferential in nature, and a sum of shs 15,000 which Mr. Mwakibete owes as value added tax due to the Malawi Government following his recent participation in trade exhibitions in that country. iii. Wages and salaries payable include shs. 6,000 payable to bartender who was recently laid off in a cost reduction exercise, the amount being that workmans compensation. Other amounts included in wages are; Workers name Period Monthly pay Total shs. A December 2004 to April 2005 1,500 7,500 B April 2005 5,000 5,000 C January to April 2005 3,000 12,000 D December 2004 to April 2005 600 3,000 E March & April 2005 5,000 10,000 F December 2004 to April 2005 900 4,500 G March & April 2005 1,000 2,000 44,000 iv. A further sum of shs 12,000 is expected to be payable to other workers if Mr. Mwakibete is compelled to lay them off due bankruptcy. This amount is not yet due. v. Mr. Mwakibete has a private house which was recently independent valued at shs. 200,000. It is, however, expected that it would fetch only shs. 150,000 in a forced sale. vi. Mwakibetes domestic servant who won shs 100,000 in Mbeya District lottery had deposited this amount with him for safe custody. She was now thinking of claiming this money, together with 5 months unpaid salary, at shs 2,000 per month. vii. Mwakibete having divorced his first wife is paying alimony of shs 2,000 per month. He is in arrears for alimony payments for 6 months. viii. Mzee Hamisi, a close friend of Mwakibete, is known to have given refuge to Mwakibete in mid February 2005, so as to give him a breathing space from pressing creditors. He subsequently sold goods to Mwakibete amounting to shs 20,000 for use in the bar, this amount being included in the trade creditors and lent him shs 50,000 for childrens school fees. ix. The owner of Ndaga Supermarket has stopped supplying Mwakibete with food on credit because Mwakibete seems reluctant to pay back an accumulated debt of shs 75,000 x. In attempt to increase his fortunes, Mr. Mwakibete took to gambling, but unfortunately he has run up gambling debt of shs 33,000 xi. Mwakibetes personal belongings- Clothe, beddings etc are valued at shs 40,000 Required: Prepare a Statement of Affairs and Deficiency Account to be submitted to the official receiver. Q3 After the completion of your initial examination of books and vouchers submitted by Hali mbaya, one of your clients, you have prepared the following Trial balance; Shs Shs Land and Building 9,000 Plant and machinery 5,000 Mortgage (secured on land and Building) 6,000 Stock at 1st May 2005 4,000 Sales 37,000 Purchases 32,000 Wages 7,000 Debtors 6,000 Creditors 19,000 Bank over draft 500 Capital 2,000 Drawings 1,500 64,500 64,500 Your further inquiries reveal that the stock at 30 April 2006 is valued at shs 3,000. The realizable value of other assets is; Land and building shs 8,500 Plant and machinery shs 4,000 One debt of sh 500 is irrecoverable Of the creditors, shs 1,000 are preferential in bankruptcy Personal drawings have not varied from previous years. Required: Prepare statement of Affairs and Deficiency account. Q4. As a result of Ngasas failure to attend an appointment schedule on 15.03.2004 with his creditors whose claims remained unpaid for a long time, a petition for bankruptcy was filed by the same creditors on 30.03.2004. Immediately on 31.03.2004, the court issued a receiving order. Prior to that, Ngasa had escaped from the rear gate of his house. On 15.02 2004, there was a serious day and night hunting, kept on by his furious creditos. As if that was not enough, Ngasa had frankly confirmed to Ngamaholo on 03.01.2004, that he could not, by all means pay the claims. Being stubborn as he is, Ngasa had on 20.12.2003 assigned a substantial portion to his trustee by the name of Ngwanasai. Given below is Ngasas Balance sheet as at the date of receiving order; Non-current assets Book value ERV Premises 2000,000 280,000 Office equipments 300,000 150,000 Fixture and Fittings 100,000 75,000 Current Assets Stock 400,000 405,000 Cash and Bank 200,000 3000,000 Liabilities and Equity Capital 2,000,000 Add: Profit 1,000,000 3,000,000 Less: Drawings 2500,000 500,000 General creditors 1,000,000 Workmen compensation 200,000 Bridging finance (payable to Ngasas nephew) 180,000 24% Exim Bank loan (secured on 1,000,000 Premises) Exim Bank loan interest 120,000 3,000,000 The following additional information is provided; i. Ngasa who had been trading as Ngasa Nabanaakwe discounted a bill for Tshs. 1,000,000/=. This bill is proved to have a slim chance of being honored on due date ii. A further workmen compensation was anticipated at shs 450,000 iii. Included in the figure of general creditors is an amount of shs 500,000/= lent by Ngasamo on 02.01.2004 with no transaction and communication ever since. iv. Ngasa has personally guaranteed his friend Holela for a Bank loan pf shs 250,000/=of which shs 200,000 remained un paid v. Ngasa only personal assets consists of a. Wearing apparel shs 342,500 b. Furniture and fittings shs 125,000 vi. On the other hand personal debts of Mr. Ngasa comprises of the following; a. School fees shs 100,000 b. Medical bills 50,000 c. Alimony 55,500,000 d. Cocaine supplies 115,000 e. Destruction fee shs 175,000/= The fee were to be paid in consideration of destroying documents Ngasa had signed at the central police traffic office acknowledging his questionable involvement in a car accident, which was caused by his reckless driving. f. Taxes Tshs 255,000/=, these were assessed on 25.02.2003 and were in respect of the year of income 2002. Required: a) When is the bankruptcy deemed to have commenced against Mr. Ngasa? b) Why is this date important c) Compute the amount of deferred creditors d) Prepare Mr. Ngasas SOA and DA.