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A, B and C were… (Class 12 Accountancy SQP 2024-25, Q18a)

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AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 3 marks · Short answer

CBSE Class 12 Accountancy sample paper 2024-25: question 18(a)

From the official CBSE sample question paper for 2024-25, section A, question 18(a), for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q18(a) · 3 marks · Short answerReconstitution of a Partnership Firm – Retirement/Death of a Partner

A, B and C were partners sharing profits, and losses in the ratio of 2:2:1. C died on 1st July, 2023 on which date the capitals of A, B and C after all necessary adjustments stood at ₹74,000, ₹ 63,750 and 42,250 respectively. A and B continued to carry on the business for six months without settling the accounts of C. During the period of six months from 1 -7-2023, a profit of ₹ 20,500 is earned using the firm’s property. State which of the two options available u/s 37 of the Indian Partnership Act, 1932 should be exercised by executors of C and why?.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

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

Hint 1

Section 37 offers profit attributable to the deceased partner's money or 6% p.a. interest.

Hint 2

Profit is shared in the ratio of capitals used, not the profit sharing ratio.

Hint 3

Interest runs only for the six months.

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. Section 37 gives the executors a choice: a share of the profits made with C's money, or interest at 6% p.a. on it. Total capital = ₹ 74,000 + ₹ 63,750 + ₹ 42,250 = ₹ 1,80,000. Option (i): profit attributable to C's capital = ₹ 20,500 × 42,250/1,80,000 = ₹ 4,812.

    1 mark

  2. Option (ii): interest = ₹ 42,250 × 6/100 × 6/12 = ₹ 1,267.50.

    1 mark

  3. The executors should choose option (i), the share of profit, as ₹ 4,812 is more than ₹ 1,267.50.

    1 mark

Answer: Option (i): share of profit ₹ 4,812 against interest ₹ 1,267.50; executors should take the share of profit

Where the marks are

  • Share of profit ₹ 4,812 (1 mark)
  • Interest ₹ 1,267.50 (1 mark)
  • Choice with reason (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Reconstitution of a Partnership Firm – Retirement/Death of a Partner, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2024-25: 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.