Page 191 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes 5. The amount left after deducting the unsecured creditors will be called surplus or deficiency
as regard unsecured creditors.
6. From the above balance calculated in (5) deduct (or add in the case of deficiency) the
amount of paid up share capital. The resultant figure will be called deficiency or surplus as
regards contributories.

Notes Deficiency account depicts how the company lost its assets during its existence.
This account shows the deficiency or surplus as the case may be. This deficiency or surplus
must be tallied with the deficiency or surplus shown by the Statement of Affairs. This
account has ten items which are classified into two groups. In the first group those items
are taken which increase the deficiency and in the second group those items are taken
which reduce the deficiency. If the total of the first group exceeds the total of the second
group, the difference is called deficiency, otherwise surplus and vice versa. This account is
an integral part of the Statement of Affairs.

self assessment

Fill in the blanks:
11. The ................. is always open to inspection by any person claiming in writing to be a creditor
or contributory of the company on the payment of the prescribed fees at all reasonable.
12. Deficiency account depicts how the ................. lost its assets during its existence.
Illustration 1
Mr. R. P. Sharma is appointed as the liquidator of Jagmohan Company Limited in voluntary
liquidation on 1 July, 2010, and the following balances are extracted from the books on that
st
date:
liabilities ` assets `
Capital: Machinery 60,000
32,000 shares of ` 5 each 1,60,000 Leasehold properties 80,000
Debentures 1,00,000 Stock-in-trade 2,000
Bank Overdraft 36,000 Book Debts 1,20,000
Liabilities for Purchases 40,000 Less: Reserve for DD 20,000 1,00,000
Investments 12,000
Calls-in-arrear 10,000
Cash-in-hand 2,000
P&L Account 70,000
3,36,000 3,36,000
Prepare a Statement of Affairs to be submitted to the meeting of creditors. The assets were valued
as under:
`
Machinery 1,20,000
Leasehold Properties 1,46,000

Investments 8,000

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