CBSE Class 12 Accountancy sample paper 2025-26: question 25(a)
From the official CBSE sample question paper for 2025-26, section A, question 25(a), for 6 marks. Try it first; the hints and our step-by-step solution are below.
Q25(a) · 6 marks · Long answerDissolution of Partnership Firm
Dhwani and Iknoor were partners sharing Profits & Losses in the ratio 3:2. Their Balance Sheet on March 31, 2025 was as follows
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Dhwani’s Capital | 2,40,000 | Cash in Hand | 50,000 |
| Iknoor’s Capital | 2,60,000 | Building | 3,00,000 |
| Investment Fluctuation Reserve | 50,000 | Debtors 80,000 (-) Prov for Doubtful Debts (8,000) | 72,000 |
| Employee Provident Fund | 50,000 | Stock | 88,000 |
| General Reserve | 60,000 | Accrued Income | 20,000 |
| Creditors | 40,000 | Profit and Loss | 1,00,000 |
| Bills Payable | 30,000 | Investment | 1,20,000 |
| Bank Overdraft | 20,000 | ||
| 7,50,000 | 7,50,000 |
On the above date, they admitted Ishaya into partnership for 25% share. Ishaya brings ₹ 2,50,000 as capital and ₹ 40,000 for goodwill. Goodwill of the firm was valued at ₹ 2,00,000. Following agreements were agreed upon:-
a) Bad Debts amounted to ₹ 5,000 and Provision for doubtful debts to be created at same existing rate.
b) Investments were valued at ₹ 1,00,000.
c) Accrued Income was recovered only of ₹ 14,500 in settlement.
d) Building was overvalued by 20%.
e) Capital of Dhwani and Iknoor were to be adjusted on the basis Ishaya’s capital contribution. Necessary adjustment to be done by opening Current Accounts.
You are required to prepare Revaluation Account and Partner’s Capital Account at the time of admission of partner.
Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2025-26.
Hints
Open one hint at a time and try again before the next.
Hint 1
Provision on debtors is at the existing rate (8,000 on 80,000) after writing off bad debts.
Hint 2
Investment Fluctuation Reserve covers the fall in investments; only the rest goes to partners.
Hint 3
Total capital is fixed by Ishaya's capital for his 1/4 share.
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.
- 2 marks
Revaluation Account
Particulars ₹ Particulars ₹ To Provision for Doubtful Debts 4,500 By Loss transferred to: To Accrued Income 5,500 Dhwani's Capital A/c 36,000 To Building 50,000 Iknoor's Capital A/c 24,000 60,000 60,000 Workings: debtors after bad debts = ₹ 75,000; provision at the existing 10% = ₹ 7,500; needed 5,000 + 7,500 = 12,500 against 8,000 held, so ₹ 4,500 more. Accrued income loss = 20,000 − 14,500 = ₹ 5,500. Building overvalued by 20%: true value = 3,00,000 × 100/120 = ₹ 2,50,000, loss ₹ 50,000. Fall in investments (₹ 20,000) is met from the Investment Fluctuation Reserve.
- ½ mark
Goodwill. Ishaya's share = 2,00,000 × 1/4 = ₹ 50,000; he brings ₹ 40,000 in cash and ₹ 10,000 is debited to his Current A/c. With no new ratio given, Dhwani and Iknoor sacrifice in 3 : 2.
- 2½ marks
Partners' Capital Accounts
Particulars Dhwani (₹) Iknoor (₹) Ishaya (₹) Particulars Dhwani (₹) Iknoor (₹) Ishaya (₹) To Revaluation (loss) 36,000 24,000 By Balance b/d 2,40,000 2,60,000 To Profit and Loss 60,000 40,000 By Investment Fluctuation Reserve 18,000 12,000 To Balance c/d 2,28,000 2,52,000 2,50,000 By General Reserve 36,000 24,000 By Cash 2,50,000 By Premium for Goodwill 24,000 16,000 By Ishaya's Current A/c 6,000 4,000 3,24,000 3,16,000 2,50,000 3,24,000 3,16,000 2,50,000 To Balance c/d 4,50,000 3,00,000 2,50,000 By Balance b/d 2,28,000 2,52,000 2,50,000 By Dhwani's Current A/c 2,22,000 By Iknoor's Current A/c 48,000 4,50,000 3,00,000 2,50,000 4,50,000 3,00,000 2,50,000 - 1 mark
Capital adjustment. Ishaya's ₹ 2,50,000 for 1/4 share gives total capital ₹ 10,00,000. Dhwani's 3/4 × 3/5 = 9/20 share needs ₹ 4,50,000 and Iknoor's 6/20 needs ₹ 3,00,000. Shortfalls of ₹ 2,22,000 and ₹ 48,000 are brought by debiting their Current Accounts.
Answer: Revaluation loss ₹ 60,000 (Dhwani ₹ 36,000, Iknoor ₹ 24,000); adjusted capitals ₹ 2,28,000 and ₹ 2,52,000; final capitals Dhwani ₹ 4,50,000, Iknoor ₹ 3,00,000, Ishaya ₹ 2,50,000 with Current A/c debits of ₹ 2,22,000 and ₹ 48,000
Where the marks are
- Revaluation Account with loss ₹ 60,000 (2 marks)
- Goodwill: premium ₹ 40,000 and ₹ 10,000 through Ishaya's Current A/c (½ mark)
- Capital accounts with reserves, P&L and goodwill (2½ marks)
- Capital adjustment through current accounts (1 mark)
Revise the chapter
- Chapter: Dissolution of Partnership Firm (notes, formulas, where marks are lost and every past question)
- Topic: Realisation Account
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