CAPITAL, £10

Dominion, Volume 24, Issue 182, 30 April 1931, Page 6

CAPITAL, £10

Kilbimie Grocery BANKRUPT PARTNERS Matter for Crown Prosecutor ' Having each put £5 into a grocery business, two partners, Messrs. Ritchie and Cain, Kilbirnie, were the chief figures in proceedings in the office of the Official Assignee (Mr. S. Tansley) yesterday, when the second meeting of their creditors was held. In conformity with a resolution from the previous meeting of creditors, the books had-been examined by a public accountant. His report was that the firm commenced business on August, 1930, and that on February 10, 1031, the partners were adjudged bankrupt. The capital introduced at the commencement was only £lO, subscribed equally by the two partners, so that the firm was bound to find itself in financial difficulties before long. The sum of £l3 was brought in by Cain’s wife on October 25. The value of the stock taken over when the firm purchased the business was £lB6/15/9, and the value of the plant was £4O/7/6. This stock was only a little more than a third of a month’s turnover. Thus heavy commitments became necessary at an early stage in the firm’s operations. To make things worse, comparatively heavy commitments were made on account of plant. The gross profit over sales, taken over the whole period, was only 4.92 per cent. Mr. Ritchie attributed the failure-to obtain the requisite gross profit to the purchase of unsuitable fancyware at a cost of £3O, to sacrificing goods purchased from another shop in which Mr. Cain was interested, to selling sugar at cost price, and to lack of attention to inside work during the last three weeks, when Mr. Caln was said to have been away seeking additional capital, and Mr. Ritchie had been fully occupied in outside work. Mr. Ritchie also pointed out as affecting the net results that the firm was not able latterly to take advantage of discounts. “It is possible that the factors mentioned by Ritchie, together with a large scale price-cutting policy, which was evidently indulged in for a part of the time nt least, would account for the low percentage of gross profit/’ stated the report. “The account of O. E. Cain, which must be regarded as synonymous with the, Cain 'Store, Seatoun, is in credit in Ritchie and Cain’s books to the extent of £l2l/13/11. The account of Ritchie and Cain in the Cain Store books is shown as in debt to the extent of £l7O. Although both sets of hooks are kept by Mr. Cain, these related accounts have never been reconciled. The extraordinary turn of events taken by Mr. Cain's store at Seatoun calls for much further explanation. Ono possible factor that would have had some bearing would be the over-valuation of stock in previous years. “I am afraid,” concluded the accountant, “that necessarily depending .largely upon what was shown by the books, I have got as far ns an accountant can get, without being able definitely to uphold or deny that, everything was clear and above board.” Mr. A. E. W. Press (to bankrupts) ; You started business with a small capital, without any expectation of paying. The whole thing has been faked to get credit, and mislead merchants. The balancesheet submitted early in January was simply faked. You had £l3 capital, and

you tried to get £5OO credit with it. You doubled the stock. This bankrupt Cain denied. Mr. F. W. Moore remarked that bankrupt had got himself so involved that he did not think that he knew where he was. The Official Assignee: The accountant found that out. Mr. Moore: His chief capital seems to have been optimism. “Although we have had an investigation by an accountant, we cannot fathom the mystery,” said Mr. Press. He moved that the Official Assignee place the matter in the hands of the Crown Prosecutor, to see whether further action could bo taken against them for incurring debts without having any expectation of paying them. Seconded by Mr. F. W. Moore, this motion was carried.