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Sun and Kiran are… (Class 12 Accountancy SQP 2023-24, Q22)

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AccountancyCBSE Class 12 · Sample paper, session 2023-24 · 4 marks · Long answer

CBSE Class 12 Accountancy sample paper 2023-24: question 22

From the official CBSE sample question paper for 2023-24, section A, question 22, for 4 marks. Try it first; the hints and our step-by-step solution are below.

Q22 · 4 marks · Long answerDissolution of Partnership Firm

Sun and Kiran are partners sharing profits and losses equally. They decided to dissolve their firm. Assets and Liabilities have been transferred to Realisation Account. Pass necessary Journal entries for the following:

a) All partners are agreed that the process of realisation at the time dissolution will be accomplished by Sun for which he will be paid ₹10,000 along with the amount of expense which amounted to 2% of total value realised from the Assets on dissolution. Some assets were sold for Cash at a cumulative Value of ₹12,00,000 and the remaining were taken over by creditors at a valuation of ₹3,00,000.
b) Deferred Advertisement Expenditure A/c appeared in the books at ₹28,000.
c) Out of the Stock of ₹1,20,000; Kiran (a partner) took over 1/3 of the stock at a discount of 25% and 50% of remaining stock was took over by a Creditor of ₹30,000 in full settlement of his claim. Balance amount of stock realized at ₹25,000.
d) An outstanding bill for repairs and renewal of ₹3,000 was settled through an unrecorded asset which was valued at ₹10,000. Balance being settled in Cash.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Expenses are 2% of everything realised from assets, including what creditors took over.

Hint 2

An asset taken over by a creditor in settlement needs no entry.

Hint 3

For (d), who pays whom the ₹ 7,000 difference?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. (a) Remuneration ₹ 10,000 + expenses 2% of (₹ 12,00,000 + ₹ 3,00,000) = ₹ 30,000, payable to Sun.

    ParticularsDr. (₹)Cr. (₹)
    Realisation A/c Dr.40,000
    To Sun's Capital A/c40,000
    (Being remuneration and expenses payable to Sun)
    1 mark

  2. (b) Deferred advertisement expenditure is a fictitious asset, not transferred to Realisation A/c; it is written off equally.

    ParticularsDr. (₹)Cr. (₹)
    Sun's Capital A/c Dr.14,000
    Kiran's Capital A/c Dr.14,000
    To Deferred Advertisement Expenditure A/c28,000
    (Being deferred advertisement expenditure written off)
    1 mark

  3. (c) Kiran takes 1/3 of stock (₹ 40,000) at 25% less = ₹ 30,000. Half of the rest (₹ 40,000) goes to a creditor of ₹ 30,000 in full settlement: no entry. The remaining stock realises ₹ 25,000.

    ParticularsDr. (₹)Cr. (₹)
    Kiran's Capital A/c Dr.30,000
    To Realisation A/c30,000
    (Being stock taken over by Kiran)
    Bank A/c Dr.25,000
    To Realisation A/c25,000
    (Being balance of stock realised)
    1 mark

  4. (d) The creditor for ₹ 3,000 takes the unrecorded asset worth ₹ 10,000 and pays the firm the ₹ 7,000 difference.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.7,000
    To Realisation A/c7,000
    (Being unrecorded asset settled against the outstanding bill and balance received)
    1 mark

Answer: (a) Realisation Dr. ₹ 40,000 to Sun; (b) Sun and Kiran Dr. ₹ 14,000 each to Deferred Advertisement ₹ 28,000; (c) Kiran Dr. ₹ 30,000 to Realisation, no entry for creditor, Bank Dr. ₹ 25,000 to Realisation; (d) Bank Dr. ₹ 7,000 to Realisation

Where the marks are

  • Entry (a) (1 mark)
  • Entry (b) (1 mark)
  • Entries for (c) (1 mark)
  • Entry (d) (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Dissolution of Partnership Firm, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.