Actually there is no prescribed format for preparing a Statement of Financial Affairs.

Based on necessity following format is recommended:

Statement of Financial Affairs of Mr. ---------,

as at --------2011
Assets Book Estimated Liabilities Expected to
(as stated and estimated by value to Produce (as stated and estimated by Rank
debtor) debtor)
Cash in hand Xxxxx Creditors Fully Secured: xxx
Cash at bank Xxxxx Estimated value of security (after
deducting reimbursement
expense and receivers’ fees)
xxx
Stock in trade xxxxx Surplus after meeting secured
liability
xxx
Machinery Xxxxx Less: Amount carried to
creditors partially secured (if
any) xxx
Furniture, fixture, utensils etc. Xxxxx Surplus transferred to assets Nill
side as per contra
xxxx
Other properties Xxxxx
Creditors partially secured:
xxx
Receivables: Less: Estimated value of security Balance Tk
xxx
Good Xxxx
Doubtful Govt. fees and other related
expenditure
xxxx
Bad Deduct as per Contra Nill
x xxx

Bills of exchange Xxxx Salaries and wages (maximum

Tk 2,000 per person)
xxx
Deduct as per Contra Nill
x xx
Surplus from Securities in hand Xxxx
of creditors fully secured as per
Contra:
Bank loan
xxxx
Deduct as per contra: Deduct as per Contra Nill
x xx
 Govt. taxes
xxx
Salaries and wages (maximum Unsecured Creditors (All other Xxxx
Tk 2,000 per person) liabilities)
xxx
Bank loan Xxxxx
xxx
Subordinate claim: Xxxx
Balance represent deficiency: Xxxx

Xxxxxxxxx Xxxxxxxxxx

Points to remember:

1. Assets which are mortgage or charged in favor of fully secured or partly secured
creditors shall not be included in assets side of Statement of affairs. If any surplus is
left after paying fully secured creditor or partly if any, to be shown in assets sides.
Note that before payment realization expenses and receiver’s fees to be paid first.
2. Preferential creditors need to be shown in liability side to be deducted as contra.
3. Two columns are shown in assets side of affairs. One is for book value another for
estimated to produce.
4. Creditors often have first or second charge over some of the assets. Those who have
first charge have priority for recovering their claim. If any surplus is left, then only
creditors having second charge will be able to get something.

Deficiency Account:

It is one kind of special account require in case of insolvency. Intend of deficiency account
is to explain the deficiency as shown in statement of affairs. It shows by means of figures
how deficiency has been brought about.

It is prepared as like capital account with the two sides reversed.

Debit side consists of –

1. Capital (excess of assets over liabilities) at the start of period under review, if any
 2. Net profit, if any
3. Any other receipts
4. Deficiency as per Statement of Affairs

Credit side consists of –

1. Excess of liabilities over assets

2. Net loss from carrying on business
3. Expenses incurred other than trade expenses-drawings
4. Surplus as per Statement of affairs if any.

Deficiency Account

Particulars Tk Particulars Tk
Opening capital (Excess of assets Excess of liabilities over assets
over liabilities)
Net profit arising from business Net loss arising from carrying on
business
Income or profit from other sources Bad debts
Interest on capital Expenses incurred other than trade
expenses
Excess of pvt assets over pvt Drawings
liabilities
Profit on realization of assets Interest on drawings
Loss on realization of assets
Speculation loss
Excess of pvt. Liabilities over
assets
Receiver expenses
Deficiency as per Statement of
Affairs
xxxxxxx xxxxxxx
Example-1:

Mr. Ali Haider filed his petition for insolvency on 31 -12-2010. From the following information
prepare Statement of Affairs and Deficiency Account of Mr. Ali Haider and also show the
distribution schedule:

His capital was Tk. 700,000 and his drawings were Tk 700,000. His assets consist of –

(a) Receivables amounting Tk 1,000,000, of which Tk 800,000 was considered as good and
the balance is estimated to produce Tk 100,000.
(b) Inventory’s book value is Tk. 1,500,000; estimated to produce Tk 900,000.
(c) Machinery (Book value Tk 1,600,000, cost Tk 1,800,000) estimated to produce Tk
1,100,000.
(d) Freehold houses (private property) valued at Tk 1,200,000, the deed of which was lodged
with the bank as security for an overdraft on business account Tk 800,000.
(e) His life policy (surrender value Tk 600,000) was given as a part security for a private
loan of Tk 1,000,000.
(f) His unsecured creditor amount to Tk. 4,030,000 and he owed Tk 50,000 to his clerk
being salary for one month of 30 employees just preceding the date of his insolvency.

Exemple-2:

The following information was extracted from the books of M/s Modern Brothers on 31-12-2010
on which an order of adjudication has made:

Particulars TK.
Ordinary Share Capital (2000 shares of Tk 100 each) 2,00,000
6% Preference Share Capital (3000 shares of Tk 100 each) 3,00,000
Calls in arrear (Estimated to realize Tk 2,000) 4,000
Creditors having a mortgage on the freehold land & building 85,000
Creditors having a second charge on freehold land & building 90,000
Trade creditors 2,70,000
5% mortgage debenture, secured by a floating charge on the whole of 2,00,000
the assets of the company (Interest paid to date)
Debtors: Good tk. 60,000; Doubtful tk. 15,000 (estimate to realize tk. 90,000
5,000) & Bad : remaining portion
Unclaimed Dividend 6,000
Bills payable 10,000
Income tax due 25,000
Salaries & wages (for 20 workers) 40,000
Bill discounted (tk. 15,000 expected to be dishonored) 40,000
Bank overdraft, secured by a second charge on the whole assets of the 20,000
company
 Cash in hand 2,000
Bills of exchange (considered good) 35,000
Freehold land & Buildings (estimated to realize tk. 1,65,000) 2,10,000
Plant & machinery (estimated to produce tk. 90,000) 1,20,000
Fixture & fittings (estimated to produce tk.8,000) 12,000
Stock in trade (estimated to produce tk. 25% less) 80,000
Patents (estimated to produce tk. 45,000 ) 70,000
Balance of Profit & loss account (Debit) 6,23,000

Example-3:

A winding up order has been issued against M/s Apex Brothers & Co,. The following
information is obtained with regard to the assets and liabilities as on 30th June 2010:

Freehold Premises (book value Tk. 450,000) valued at 3,750,000

First Mortgage of Freehold premises 3,000,000
Second Mortgage of Freehold premises 1,125,000
8% Debentures carrying a floating charge on the undertaking, interest 500,000
due 1st September and 1st April and paid on due dates
Managing Director’s emoluments (8 months) 225,000
Staff salary unpaid (one month for 50 employees) 160,500
Trade Debtors -
Good 315,000
Doubtful (estimated to realize 50%) 129,000
Bad 727,500
Plant and Machinery (Book Value Tk. 247,500) estimated to realize 1,740,000
Bank Overdraft – Unsecured 581,250
Cash in hand 8,250
Stock (at cost – Tk. 50,850) estimated to realize 339,000
Issued Capital: Equity shares of Tk. 10 each fully called up 1,500,000
Calls-in-arrears (estimated to realize--Tk. 3,000) 15,000
Unsecured creditors 2,962,500
Contingent liability in respect of a claim for damages Tk. 37,500 – 180,000
estimated to be settled for
Income-tax Liability –
For the year to 30-06-2008 52,500
For the year to 30-06-2009 12,750
For the year to 30-06-2010 27,000

You are required to prepare a Statement of Affairs and Deficiency Account