DCM1203 FUNDAMENTALS OF ACCOUNTING II JULY-AUGUST 2025

Description

SESSION	JULY-AUGUST 2025
PROGRAM	BACHELOR OF COMMERCE
SEMESTER	II
COURSE CODE & NAME	DCM1203 FUNDAMENTALS OF ACCOUNTING II

 

 

Assignment Set – 1

 

 

Q1. P and Q are partners sharing profits in the ratio of 4 : 1. Their capitals are ₹5,00,000 and ₹3,00,000 respectively. Interest on capital is agreed at 6% p.a. Q is to be allowed an annual salary of ₹40,000 which has not been withdrawn.

Profit for the year ended 31st March 2021, before charging interest on capital but after charging Q’s salary, amounted to ₹3,00,000. A provision of 4% of the profit is to be made for manager’s commission.

Prepare the Profit & Loss Appropriation Account for the year and show the allocation of profits (also show the partners’ capital/current account adjustments as required).  4+6

Ans 1.

Profit & Loss Appropriation A/c (P & Q)

Given

• Profit-sharing ratio (P:Q) = 4:1
• Capitals: P ₹5,00,000, Q ₹3,00,000
• Interest on capital = 6% p.a.
• Q’s salary = ₹40,000 p.a. (not withdrawn)
• Profit for year after charging Q’s salary but before interest on capital = ₹3,00,000

Step 1: Adjust profit (since Q salary is an appropriation)

Net Profit (as given, after charging Q salary) = ₹3,00,000

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Q2. Galaxy & Co. is a partnership firm consisting of partners X and Y who share profits and losses in the ratio of 2 : 3.

X is entitled to a monthly salary of ₹2,000.

Y is entitled to a monthly commission of ₹1,200.

X’s initial capital investment is ₹1,50,000 and Y’s initial capital investment is ₹2,50,000.

Show how the above items will appear under:

(1) Fixed Capital Method

(2) Fluctuating Capital Method 5+5           

Ans 2.

Q2) Presentation under Fixed Capital Method & Fluctuating Capital Method

Given

• Partners: X and Y, ratio 2:3
• X salary = ₹2,000 per month = ₹24,000 p.a.
• Y commission = ₹1,200 per month = ₹14,400 p.a.
• Capitals: X ₹1,50,000, Y ₹2,50,000

(1) Fixed Capital Method

 

 

Q3. Riya, Karan, and Mehak are partners sharing profits in the ratio of 4 : 3 : 2.

Karan decides to retire from the firm. On the date of his retirement, the goodwill of the firm is valued at ₹72,000, while the goodwill already appearing in the books is ₹36,000.

Riya and Mehak decide to share future profits in the ratio of 5 : 3.

Pass the necessary journal entries in the books of the firm to adjust goodwill. 10         

Ans 3.

Goodwill Adjustment on Karan’s Retirement (Journal Entries)

Given:
Old profit-sharing ratio (Riya : Karan : Mehak) = 4 : 3 : 2

New profit-sharing ratio (Riya : Mehak) = 5 : 3

Goodwill valued on retirement = ₹72,000

Goodwill appearing in books = ₹36,000

Working Notes

1. Write off existing goodwill already in books (₹36,000) in old ratio 4:3:2:

 

 

Assignment Set – 2

 

 

Q4. Elucidate the meaning of  purchase consideration and explain its methods of calculation. 2+8    

Ans 4.

Meaning of Purchase Consideration

Purchase consideration is the total amount that the purchasing company agrees to pay to the shareholders (or owners) of the selling company for taking over its business. In simple terms, it is the price of acquisition paid for the purchase of a business as a going concern. It may be paid in cash, shares, debentures, or a combination of these. Purchase consideration is important because it determines how the takeover is recorded in the books and how the settlement with the vendor’s shareholders is made.

Methods of Calculation of Purchase Consideration

In company amalgamation or absorption, purchase consideration can be calculated using the

 

Q5. Show what entries would be passed by the head office on 31st March 2015 to record the following transactions:

1. Goods amounting 5,000 transferred from Kolkata branch to Kanpur branch under instructions from head office.
2. Depreciation of branch fixed assets when such accounts are opened in the head office books.
3. A consignment of 3,000 made by the Kanpur branch to head office on 26th March and received by the head office on 4th April 2015.
4. Goods worth 5,000 sent by the head office to the Kanpur branch on 20th March 2015 and received later on April 15, 2015 2+2+3+3

Ans 5.

Journal Entries in the Head Office Books (31 March 2015)

Journal (Head Office)

Date	Particulars	Dr. (₹)	Cr. (₹)
31-03-2015	Kanpur Branch A/c Dr.	5,000
	To Kolkata Branch A/c		5,000
	(Being goods worth ₹5,000 transferred from Kolkata Branch to Kanpur Branch as per Head Office instructions.)
Date	Particulars	Dr. (₹)	Cr. (₹)
31-03-2015	Branch Depreciation A/c (or Branch P&L A/c) Dr.	X

 

Q6. Urmila and Umesh decided to undertake a venture jointly. They agreed to share profits & losses in the ratio of 3: 2. Urmila supplied from her own stock goods worth ₹2,00,000 and paid ₹4,950 for freight and ₹1,200 for Sundry Expenses. Umesh purchased goods of ₹1,95,000 for the venture and paid ₹ 7,000 for selling expenses. Umesh accepted a bill for 3 months of ₹95,000 drawn by Urmila as an advance. This bill was discounted immediately by Urmila for ₹92,000 and the amount of discount was charged to joint venture A/c. Umesh sold all the goods for ₹5,00,000. At the end of the venture, the accounts were settled. Give journal entries for the above transactions, in the books of Urmila 10      

Ans 6.

Journal Entries in the Books of Urmila (Joint Venture)

Note: The question does not provide specific dates for these transactions (except the venture period of the bill). Therefore, entries are recorded as on various dates.

Journal (Urmila’s Books)

Date	Particulars	Dr. (₹)	Cr. (₹)
Various	Joint Venture A/c Dr.	2,00,000
	To Purchases/Stock A/c		2,00,000
	(Being goods worth ₹2,00,000 supplied by Urmila from her own stock to the joint venture.)
Date	Particulars
Various	Joint Venture A/c Dr.	4,950
	To Bank/Cash A/c			4,950
	(Being freight paid by Urmila for the joint venture.)

 

 

 

Date

Particulars

Dr. (₹)

Cr. (₹)