DCM1203 B.Com FUNDAMENTALS OF ACCOUNTING II

Description

SESSION	MARCH 2025
PROGRAM	BACHELOR OF COMMERCE (B.COM)
SEMESTER	02
COURSE CODE & NAME	DCM1203 FUNDAMENTALS OF ACCOUNTING II

 

 

Assignment Set – 1

 

 

Q1. Xia and Yamini are partners sharing profits in the ratio of 3: 2 with capitals of ₹ 16,00,000 and ₹ 12,00,000 respectively. Interest on capital is agreed at 5% p.a. Yamini is to be allowed an annual salary of ₹ 120,000 which has not been withdrawn. Profit for the year ended 31st March 2025 before interest on capital but after charging Yamini’s salary amounted to ₹ 2,40,000. A provision of 5% of the profit is to be made in respect commission to the manager. Prepare an account showing the allocation of profits

Ans 1.

Allocation of Profits in a Partnership

In a partnership firm, profit distribution is done according to the partnership deed. If the deed specifies interest on capital, salaries, and commissions, these are charged before distributing the net profit in the agreed profit-sharing ratio. In this case, Xia and Yamini are partners with capitals of ₹16,00,000 and ₹12,00,000 respectively, sharing profits in a 3:2 ratio. They agreed on a 5% interest on capital and Yamini is entitled to a fixed salary of ₹1,20,000 per annum. Additionally, a 5% commission is allowed to the manager from the net profit.

The net profit

 

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Q2. Alpha is a partnership firm consisting of A and B as partners sharing their profits in 3:7.

A is entitled to receive Rs.1,000 per month as Salary.

A’s Initial Capital Investment = Rs.1,00,000

B is entitled to receive Rs.1,500 per month as Commission.

B’s Initial Investment = Rs.2,00,000

How will we show the above items under:

(a) Fixed Capital Method

(b) Fluctuating Capital Method

Ans 2.

Fixed Capital Method vs Fluctuating Capital Method

In partnership accounting, partners’ capital accounts can be maintained using either the Fixed Capital Method or the Fluctuating Capital Method, depending on the firm’s accounting policy and agreement.

Under the Fixed Capital Method, the capital of partners remains unchanged unless additional capital is introduced or withdrawn. All adjustments such as salary, interest on capital, drawings, or commission are recorded in a separate account called the Current Account. This method helps

 

Q3. Rupa, Sushi, and Shalu are partners who split profits in a 5:3:2 ratio. Ruppa retired with capitals of ₹ 46,000, ₹ 42,000, and ₹ 38,000, respectively, following all adjustments on retirement. Sushi and Shalu chose to set the firm’s total capital at ₹ 84,000, with a 7:5 ratio. Make the relevant notebook entries after calculating the actual amount to be paid or brought in by each partner.

Ans 3.

Capital Adjustments on Retirement of a Partner

When a partner retires from a firm, the remaining partners may decide to continue the business. In such cases, it becomes essential to restructure the capital of the remaining partners according to the new profit-sharing ratio. This process is called capital adjustment.

In the given scenario, Rupa retires from the partnership, and the remaining partners—Sushi and Shalu—decide

 

 

Assignment Set – 2

 

 

Q1. What is purchase consideration? Explain its methods of calculation  2+8

Ans 1.

Meaning of Purchase Consideration

Purchase consideration refers to the total amount that a purchasing company agrees to pay to acquire the business or assets of another company. This consideration can be in the form of cash, shares, debentures, or a combination of these. It plays a vital role in amalgamations, mergers, takeovers, or acquisitions where the acquiring company needs to compensate the transferor company or its shareholders for taking over the business. The value of the purchase consideration must be fair, and it is calculated based on agreed terms or accounting principles. It is the price paid for acquiring ownership and control of the business or specific assets

 

 

Q2. Show what entries would be passed by the head office on 31st March 2025 to record the following transactions:

1. Goods amounting 5,000 transferred from Jaipur branch to Varanasi 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 Varanasi branch to head office on 26th March and received by the head office on 4th April 2025.
4. Goods worth 5,000 sent by the head office to the Varanasi branch on 20th March 2025 and received later on April 15, 2025

Ans 2.

Journal Entries Passed by Head Office on 31st March 2025

1. Goods Transferred from Jaipur Branch to Varanasi Branch

Amount = ₹5,000 Nature: Inter-branch transfer as per Head Office instructions.

Formula: Dr. Receiving Branch A/c → Cr. Sending Branch A/c

Journal Entry:

 

Q3. Shriya and Shashwat decided to undertake a venture jointly. They agreed to share profits & losses in the ratio of 3: 2. Shriya supplied from her own stock goods worth ₹2,00,000 and paid ₹4,950 for freight and ₹1,200 for Sundry Expenses. Shashwat purchased goods of ₹1,95,000 for the venture and paid ₹ 7,000 for selling expenses. Shashwat accepted a bill for 3 months of ₹95,000 drawn by Shriya as an advance. This bill was discounted immediately by Shriya for ₹92,000 and the amount of discount was charged to joint venture A/c. Shashwat 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 Shriya

Ans 3.

Journal Entries in the Books of Shriya (Joint Venture with Shashwat)

Given Details:

• Profit Sharing Ratio = Shriya : Shashwat = 3 : 2
• Shriya: Goods = ₹2,00,000, Freight = ₹4,950, Sundry Expenses = ₹1,200
• Shashwat: Purchases