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Gar, Mur and Wil were partners, in a firm, sharing profits and losses equally. Their capitals were not equal. There was no partnership deed. The firm dissolved on 30th June 2020. The position was as follows, after dissolution: Balance Sheet as of June 30, 2020 Liabilities $ Assets $ Gar capital a/c 2500 Mur capital a/c 314 Cash 1916 Wil capital 263 Loss on realisation 635 Wil became insolvent and could not pay anything against the capital deficiency. ACCT3801 21/01 The Council of Community Colleges of Jamaica Page 7 Required C. Prior to the Garner vs Murray’s rule, Mur had raised an objection and claimed that the loss is a capital loss and not a business loss. Therefore, such loss due to capital deficiency of a partner to be borne in capital ratio and not in profit sharing ratio. In court, Mur got the decision in his favour. Explain FOUR (4) points in the Garner vs Murray decision?
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