Prepare Bank Reconciliation statement from the following information as on 31st
March, 2019.
1) Balance as per Cash Book * 10,000.
2) Cheque of 2,000 issued but not presented to Bank for payment.
3) Our debtor directly deposited 3,500 to our Bank account by NEFT, not recorded in the
Cash Book.
4) Bank paid electricity bill on our behalf + 450 and charged Bank charges 100.
5) Paid 1,500 to ABC & company, our supplier by business debit card but recorded in Cash
Book as 150.
6) Bank credited interest on Investment 500.
7) Cheque of * 885 issued and presented to Bank but wrongly entered in the Pass Book as
865.
Answers
Answer:
debt for a company must be determined or definite sum of money payable immediately or at a future date. A conditional or contingent liability is not a debt, unless the contingency or condition has already happened. Where a company acts as a guarantor for repayment of a loan, and the principle debtor has committed default, the amount guaranteed is a 'debt' in respect of which a petition for winding up will lie under this section. When a dividend is declared by the company, it becomes a debt due by the company and entitles the shareholder to apply under this section in case the company is unable to pay the amount of the dividend. A winding up petition cannot be sustained on the basis of a debt which became due before prior to the company's incorporation even if one of the objects of the company was to pay off the debt.
The scope of the meaning to be given to the phrase "unable to pay its debts" appearing in section 218(1)(e) of the Companies Act 1965 is explained by McPherson in his book "The Law of Company Liquidation" (3rd Editon) at page 54 as follows:
The phrase "unable to pay its debts" is susceptible of two interpretations. One meaning which may properly be attached to it is that a company is unable to pay its debts if it is shown to be financially insolvent in the sense that its liabilities exceed its assets. But to require proof of this in every case would impose upon an applicant the often near-impossible task of establishing the true financial position of the company and the weight of authority undoubtedly supports the view that the primary meaning to the phrase is insolvency in the commercial sense - that is inability to meet current demands irrespective of whether the company is possessed of assets which, if realised, would enable it to discharge its liabilities in full.
The court should not go in a winding-up petition into disputed questions of fact which cannot be sorted out without leading evidence. A claim for damages for breach of contract is not in the category of a debt due. A petition filed by a secured creditor just to exert pressure on the company is liable to be dismissed. The machinery for winding up will not be allowed to be utilized merely as a means for realizing debts due from a company. A winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by a company. However, the court can hardly exercise any discretion where the company is so hopelessly insolvent that there is absolutely no chance of resurrection. The company is not liable to be wound up if it is financially sound and refuses to pay the debts. Winding up is not an alternative to a civil suit