CBSE Class 12 Accountancy sample paper 2025-26: question 25(b)
From the official CBSE sample question paper for 2025-26, section A, question 25(b), for 6 marks. Try it first; the hints and our step-by-step solution are below.
Q25(b) · 6 marks · Long answerReconstitution of a Partnership Firm – Retirement/Death of a Partner
Aman, Barman and Raman were partners sharing Profits & Losses in the ratio 5:3:2. Their Balance Sheet on March 31, 2025 was as follows
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Aman’s Capital | 80,000 | Bank | 30,000 |
| Barman’s Capital | 70,000 | Building | 1,00,000 |
| Raman’s Capital | 50,000 | Furniture | 60,000 |
| Workmen Compensation Reserve | 50,000 | Debtors | 50,000 |
| Accumulated Depreciation on Building | 20,000 | Stock | 40,000 |
| Profit and Loss | 40,000 | Prepaid Expenses | 20,000 |
| Creditors | 25,000 | Deferred Revenue Exp. | 20,000 |
| Outstanding Expenses | 15,000 | Goodwill | 30,000 |
| 3,50,000 | 3,50,000 |
On the above date Barman retired and his share was acquired by Aman and Raman equally. Following agreements were agreed upon:-
a) Create Provision for doubtful debts @ 10%.
b) Market value of Building is ₹1,00,000 and Furniture was overvalued by 20%.
c) Stock was valued at ₹ 55,000. Creditors of ₹ 15,000 took over stock of ₹ 10,000 in settlement of their claims.
d) Goodwill of the firm was valued at ₹ 80,000.
e) Prepaid Expenses are worthless and Outstanding Expenses are now ₹20,000.
f) ₹ 20,000 was immediately paid to Barman on retirement brought in Aman and Raman in ratio 3:2.
Prepare Revaluation Account and Partner’s Capital Account at the time of retirement 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
Compare the building's market value with its book value net of accumulated depreciation.
Hint 2
Settling creditors with stock worth less than the claim is a gain.
Hint 3
Only Aman and Raman gain Barman's share, so they pay for his goodwill.
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 Furniture 10,000 By Building 20,000 To Prepaid Expenses 20,000 By Stock 15,000 To Provision for Doubtful Debts 5,000 By Creditors 5,000 To Outstanding Expenses 5,000 40,000 40,000 Workings: building net of depreciation = 1,00,000 − 20,000 = ₹ 80,000, market value ₹ 1,00,000, gain ₹ 20,000. Furniture overvalued by 20%: true value = 60,000 × 100/120 = ₹ 50,000, loss ₹ 10,000. Stock up from ₹ 40,000 to ₹ 55,000. Creditors of ₹ 15,000 settled by stock worth ₹ 10,000, gain ₹ 5,000. Result: neither gain nor loss.
- 1 mark
Goodwill. Barman's share = 80,000 × 3/10 = ₹ 24,000, borne by gainers Aman and Raman equally (₹ 12,000 each). Existing goodwill ₹ 30,000 and deferred revenue expenditure ₹ 20,000 are written off in 5 : 3 : 2; WCR and P&L credit balance are credited in 5 : 3 : 2.
- 3 marks
Partners' Capital Accounts
Particulars Aman (₹) Barman (₹) Raman (₹) Particulars Aman (₹) Barman (₹) Raman (₹) To Deferred Revenue Exp. 10,000 6,000 4,000 By Balance b/d 80,000 70,000 50,000 To Goodwill (written off) 15,000 9,000 6,000 By Workmen Compensation Reserve 25,000 15,000 10,000 To Barman's Capital A/c 12,000 12,000 By Profit and Loss 20,000 12,000 8,000 To Cash 20,000 By Aman's Capital A/c 12,000 To Barman's Loan A/c 86,000 By Raman's Capital A/c 12,000 To Balance c/d 1,00,000 54,000 By Cash 12,000 8,000 1,37,000 1,21,000 76,000 1,37,000 1,21,000 76,000
Answer: Revaluation: no gain or loss (₹ 40,000 each side). Barman gets ₹ 20,000 cash and ₹ 86,000 to his loan; closing capitals Aman ₹ 1,00,000 and Raman ₹ 54,000
Where the marks are
- Revaluation Account balancing at ₹ 40,000 (2 marks)
- Goodwill and reserve treatment (1 mark)
- Capital accounts with Barman's loan ₹ 86,000 and closing balances (3 marks)
Revise the chapter
- Chapter: Reconstitution of a Partnership Firm – Retirement/Death of a Partner (notes, formulas, where marks are lost and every past question)
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