✓ Board-verified
Accountancy · 2026 · 6 marks
Reconstitution of a Partnership Firm – Admission of a PartnerRevaluation of Assets and Reassessment of Liabilities6 markslong answer
CBSE 2026 · Region 4 · Set 1 · Q24
Arjun and Kavya were partners in a firm sharing profits and losses in the ratio of 3: 2. Their Balance Sheet as at 31st March, 2025 was as follows:…
Arjun and Kavya were partners in a firm sharing profits and losses in the ratio of $\displaystyle 3$ : 2. Their Balance Sheet as at 31st March, $\displaystyle 2025$ was as follows :
Balance Sheet of Arjun and Kavya as at 31st March, $\displaystyle 2025$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capitals : | Building | $\displaystyle 6,00,000$ | |
| Arjun $\displaystyle 4,80,000$ | Investments | $\displaystyle 2,80,000$ | |
| Kavya $\displaystyle 5,20,000$ | Stock | $\displaystyle 3,76,000$ | |
| $\displaystyle 10,00,000$ | Debtors $\displaystyle 1,60,000$ | ||
| Investment Fluctuation Reserve | $\displaystyle 1,00,000$ | Less : Provision for doubtful debts $\displaystyle 7,000$ | $\displaystyle 1,53,000$ |
| Creditors | $\displaystyle 4,00,000$ | Cash | $\displaystyle 91,000$ |
| $\displaystyle 15,00,000$ | $\displaystyle 15,00,000$ |
$\displaystyle 1$ On 1st April, $\displaystyle 2025$, Raghav was admitted as a new partner for th $\displaystyle 4$ share in the profits of the firm on the following terms : (i) Raghav shall bring ₹ $\displaystyle 5,00,000$ as his capital. (ii) Goodwill of the firm was valued at ₹ $\displaystyle 4,00$,000. Raghav was unable to bring his share of goodwill premium in cash. (iii) Provision for doubtful debts was to be created @ $\displaystyle 10$% on debtors. (iv) Investments were valued at ₹ $\displaystyle 2,00,000$ and building was to be brought down to $\displaystyle 5,00$,000. (v) Capitals of Arjun and Kavya were to be adjusted on the basis of Raghav's capital in the business. Actual cash was to be paid off or brought in by the old partners as the case may be. Prepare Revaluation Account and Partners' Capital Accounts.
Aarav, Kunal and Manav were partners in a firm sharing profits and losses in the ratio of $\displaystyle 5$ : $\displaystyle 3$ : 2. Their Balance Sheet as at 31st March, $\displaystyle 2025$ was as follows : Balance Sheet of Aarav, Kunal and Manav as at
31st March, $\displaystyle 2025$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Sundry Creditors | $\displaystyle 70,000$ | Cash | $\displaystyle 2,30,000$ |
| Workmen Compensation Reserve | $\displaystyle 1,00,000$ | Debtors $\displaystyle 90,000$ | |
| Capitals : | Less : Provision for doubtful debts $\displaystyle 10,000$ | $\displaystyle 80,000$ | |
| Aarav $\displaystyle 3,00,000$ | Stock | $\displaystyle 1,60,000$ | |
| Kunal $\displaystyle 2,50,000$ | Machinery | $\displaystyle 2,50,000$ | |
| Manav $\displaystyle 1,50,000$ | Building | $\displaystyle 1,50,000$ | |
| $\displaystyle 7,00,000$ | |||
| $\displaystyle 8,70,000$ | $\displaystyle 8,70,000$ |
Aarav retired on the above date and it was agreed that : (i) Kunal and Manav will share future profits in the ratio of $\displaystyle 1$ : 4. (ii) Goodwill of the firm be valued at ₹ $\displaystyle 6,00,000$ and the retiring partner's share would be adjusted through the capital accounts of the remaining partners. (iii) An unrecorded creditor of $\displaystyle 2$' $\displaystyle 20,000$ was to be taken into account. (iv) Debtors of ₹ $\displaystyle 15,000$ were to be written off as bad debts. (v) Liability on account of workmen compensation amounted to ₹ $\displaystyle 40$,000. (vi) Amount payable to Aarav was transferred to his loan account. Pass necessary journal entries for the above transactions in the books of the firm on Aarav's retirement.
Marking-scheme solution
Books of Arjun, Kavya and Raghav
Dr. Revaluation A/c Cr.
Particulars Amount Particulars Amount
(₹) (₹)
To Provision for doubtful debts A/c $\displaystyle 9,000$ By Loss transferred to capital
A/c:
Arjun $\displaystyle 65,400$
To Building A/c $\displaystyle 1,00,000$ Kavya $\displaystyle 43,600$ $\displaystyle 1,09,000$
$\displaystyle 1,09,000$ $\displaystyle 1,09,000$
Dr. Partner’s Capital Accounts Cr.
Particulars Arjun Kavya Raghav Particulars Arjun Kavya Raghav
To $\displaystyle 65,400$ $\displaystyle 43,600$ By Balance
Revaluation b/d $\displaystyle 4,80,000$ $\displaystyle 5,20,000$
(Loss)
By
Cash/Bank $\displaystyle 5,00,000$
A/c
By
Investment
Fluctuation $\displaystyle 12,000$ $\displaystyle 8,000$
Reserve
By Raghav’s
Current a/c $\displaystyle 60,000$ $\displaystyle 40,000$
To Balance By Cash A/c $\displaystyle 4,13,400$ $\displaystyle 75,600$
c/d $\displaystyle 9,00,000$ $\displaystyle 6,00,000$ $\displaystyle 5,00,000$
9.$\displaystyle 65.400$ $\displaystyle 6.43.600$ $\displaystyle 5,00,000$ $\displaystyle 9,65,400$ $\displaystyle 6,43,600$ $\displaystyle 5,00,000$
Working Note:
Raghav’s Capital = ₹ $\displaystyle 5,00,000$
Raghav’s share = ¼
Remaining share = $\displaystyle 1$- ¼ = ¾
Arjun’s new share = ¾ x $\displaystyle 3$/$\displaystyle 5$ = $\displaystyle 9$/$\displaystyle 20$
Kavya’s new share = ¾ x $\displaystyle 2$/$\displaystyle 5$ = $\displaystyle 6$/$\displaystyle 20$
New Profit-sharing ratio = $\displaystyle 9$:$\displaystyle 6$:$\displaystyle 5$
Total capital of the new firm = ₹ $\displaystyle 5,00,000$ X $\displaystyle 4$/$\displaystyle 1$ = ₹ $\displaystyle 20,00,000$
Arjun’s New Capital = $\displaystyle 9$/$\displaystyle 20$ x ₹ $\displaystyle 20,00,000$ = ₹ $\displaystyle 9,00,000$
Kavya’s New Capital = $\displaystyle 6$/$\displaystyle 20$ x ₹ $\displaystyle 20,00,000$ = ₹ $\displaystyle 6,00,000$
Q (b). Aarav, Kunal and Manav were partners………………..
Ans.
Books of Aarav, Kunal and Manav
Journal
Date Particulars L. Dr. Cr.
F. Amount Amount
(₹) (₹)
$\displaystyle 2025$
March $\displaystyle 31$ Manav’s Capital A/c Dr. $\displaystyle 3,60,000$
To Aarav’s Capital A/c $\displaystyle 3,00,000$
To Kunal’s Capital A/c $\displaystyle 60,000$
(Adjustment for goodwill on Aarav’s
retirement)
March $\displaystyle 31$ Revaluation A/c Dr. $\displaystyle 20,000$
To Creditors A/c $\displaystyle 20,000$
(Unrecorded creditors taken into account)
March $\displaystyle 31$ Bad debts A/c Dr. $\displaystyle 15,000$
To Debtors A/c $\displaystyle 15,000$
(Bad debts written off)
March $\displaystyle 31$ Provision for Doubtful Debts A/c Dr. $\displaystyle 10,000$
Revaluation A/c Dr. $\displaystyle 5,000$
To Bad Debts A/c $\displaystyle 15,000$
(Bad debts charged to provision for doubtful
debts and balance to revaluation account)
March $\displaystyle 31$ Workmen Compensation Reserve A/c Dr. $\displaystyle 1,00,000$
To Claim for Workmen Compensation A/c $\displaystyle 40,000$
To Aarav’s Capital A/c $\displaystyle 30,000$
To Kunal’s Capital A/c $\displaystyle 18,000$
To Manav’s Capital A/c $\displaystyle 12,000$
(Workmen Compensation Reserve transferred
to Claim for workmen compensation account
and balance distributed among partners)
Or
Workmen Compensation Reserve A/c Dr. $\displaystyle 40,000$
To Claim for Workmen Compensation A/c $\displaystyle 40,000$
(Workmen Compensation Reserve transferred
to Claim for workmen compensation account)
Workmen Compensation Reserve A/c Dr $\displaystyle 60,000$
To Aarav’s Capital A/c $\displaystyle 30,000$
To Kunal’s Capital A/c $\displaystyle 18,000$
To Manav’s Capital A/c $\displaystyle 12,000$
(Balance Workmen Compensation Reserve
distributed in old profit-sharing ratio)
March $\displaystyle 31$ Aarav’s Capital A/c Dr. $\displaystyle 12,500$
Kunal’s Capital A/c Dr. $\displaystyle 7,500$
Manav’s Capital A/c Dr. $\displaystyle 5,000$
To Revaluation A/c $\displaystyle 25,000$
(Revaluation loss borne by partners)
March $\displaystyle 31$ Aarav’s Capital A/c Dr. $\displaystyle 6,17,500$
To Aarav’s Loan A/c $\displaystyle 6,17,500$
(Amount due to Aarav transferred to his loan
account)
All Reconstitution of a Partnership Firm – Admission of a Partner questions2026 question paperPractice Reconstitution of a Partnership Firm – Admission of a Partner →
More from Reconstitution of a Partnership Firm – Admission of a Partner
- Asha and Indra were partners in a firm sharing profits and losses in the ratio of 3: 2. Their Balance Sheet on 31st March, 2025 was as following:…2026
- Devki and Neena were partners in a firm sharing profits and losses in the ratio of 4:3. Amar was admitted as a new partner for 1/5 h share in the…2026
- Alex, Benn and Cole were partners in a firm sharing profits and losses in 1th the ratio of 5: 3: 2. They admitted Dona as a new partner for share 5…2024
- Sanjay and Vijay were partners in a firm sharing profits and losses in the ratio of 4: 3. On 1st April, 2025 they admitted Babul as a new nth...,..…2026
- The goodwill of a firm was valued on the basis of 3 years purchase of average profits for the last four years. The profits of last four years ending…2023
- Mansi and Uma were partners in a firm and their capitals were 4,00,000 and ₹ 2,00,000 respectively. Normal rate of return in a similar business was…2026
- Atul, Beena and Sita were partners in a firm sharing profits and losses in the ratio of 8: 7: 5. Damini was admitted as a new 1th partner for share…2024
- Bhawana and Vedika were partners in a firm sharing profits and losses in the ratio of 5: 4. From 1st April, 2024 they decided to share future profits…2025
CBSE Class 12 Accountancy past-paper question from the 2026 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.