Suppose the total outside liabilities of 'Flavours' a fast food restaurant are 18,00,000 at the
time of dissolution, but its assets are worth 716,00,000 only. How will the debts be repaid
if it is a sole proprietorship organisation ?
Answers
Answer:
2,9876
Explanation:
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Answer:
Explanation:
The organization is a sole proprietorship firm. Sole proprietors have unlimited liability. This implies that the owner is personally responsible for payment of debts in case the assets of the business are not sufficient to meet all the debts. But his assets are sufficient to payment the debt.
As such the owner's personal possessions such as his/her personal car and other assets could be sold for repaying the debt. In the given case, the total debts that remain unpaid are Rs. 1,800,000 but the organizational assets amount to Rs.71600,000 only . In that can the creditors can demand from the proprietor to pay Rs.900,000 from his/her personal sources even if he/she has to sell his/her personal property to repay the firm's debts.