Question

2.) In case of Piecemeal Distribution
of cash, ...... are paid before external
Liabilities.
*​

Answer 1

Explanation:

DATE:

I enter the following transaction in an

analytical pretty cash book under

inprest system and Balarce it

1-2-2017 Received cheque

3-2-2017 Receired postal stamp

15-2-2017 paid carriage on pa

parcels 30

20-2-2017 Parcheesed office files and paper 15

25-2-2017 Paid foon office charing

paid feer advertisement

2 od

2

ho

us

29- 2- 2017

Answer 2

In the case of Piecemeal Distribution of cash, expenses of dissolution is paid before external Liabilities.

• When the assets are comprehended deliberately piece by piece, there is a necessity to follow a proper rule to release the liabilities. Out of the scale revenue, the expenses of dissolution should be fulfilled first and the balance should be manipulated to pay the outside creditors such as Bank O/D, B/P, Creditors, Loans, etc. in the following order:
• (1) Payment of wholly secured creditors.
• (2) Payment to partly secured creditors to the expanse of the securities realisation.
• (3) Payment to preferential creditors such as salary, and dues to Government.
• (4) Payment to unsecured creditors.
• (5) Only after entirely discharging the unsecured outside creditors, payment to internal liabilities in the structure of partners' loans should be made.
• (6) Finally partners should be paid their outstanding towards their capital.

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