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Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.
- a)Profit and Loss a/c will be credited by Rs. 1,20,000.
- b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.
- c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.
- d)None of the these.
Correct answer is 'C'. Can you explain this answer?
Most Upvoted Answer
Radha, Seeta and Laxmi were partners sharing profits and losses in the...
The correct answer is option C: Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.
1. Calculation of Gaining Ratio:
- The given profit-sharing ratio of Radha, Seeta, and Laxmi is 2:3:5.
- Since Seeta is retiring, the new profit-sharing ratio of Radha and Laxmi will be 2:5.
- The gaining ratio is calculated as the difference between the new and old ratios for the remaining partners. In this case, the gaining ratio of Radha and Laxmi is (2:5 - 2:5:5) = (2:5).
2. Calculating Seeta's share in Goodwill:
- Seeta's share in the Goodwill of the firm is calculated based on the old profit-sharing ratio.
- Seeta's share in the Goodwill = (3/10) * Rs. 1,20,000 = Rs. 36,000.
3. Treatment for Goodwill:
- Seeta's Capital a/c will be credited by Rs. 36,000 (Seeta's share in the Goodwill) to record her withdrawal from the business.
- Radha and Laxmi's Capital a/c will be debited with their respective share in the Goodwill based on the gaining ratio.
- Radha's share in the Goodwill = (2/7) * Rs. 36,000 = Rs. 10,286 (approx.).
- Laxmi's share in the Goodwill = (5/7) * Rs. 36,000 = Rs. 25,714 (approx.).
- The journal entry for this transaction will be:
Radha's Capital a/c Dr. Rs. 10,286
Laxmi's Capital a/c Dr. Rs. 25,714
To Seeta's Capital a/c Rs. 36,000
This entry records the payment of Goodwill to Seeta by Radha and Laxmi in their gaining ratio.
1. Calculation of Gaining Ratio:
- The given profit-sharing ratio of Radha, Seeta, and Laxmi is 2:3:5.
- Since Seeta is retiring, the new profit-sharing ratio of Radha and Laxmi will be 2:5.
- The gaining ratio is calculated as the difference between the new and old ratios for the remaining partners. In this case, the gaining ratio of Radha and Laxmi is (2:5 - 2:5:5) = (2:5).
2. Calculating Seeta's share in Goodwill:
- Seeta's share in the Goodwill of the firm is calculated based on the old profit-sharing ratio.
- Seeta's share in the Goodwill = (3/10) * Rs. 1,20,000 = Rs. 36,000.
3. Treatment for Goodwill:
- Seeta's Capital a/c will be credited by Rs. 36,000 (Seeta's share in the Goodwill) to record her withdrawal from the business.
- Radha and Laxmi's Capital a/c will be debited with their respective share in the Goodwill based on the gaining ratio.
- Radha's share in the Goodwill = (2/7) * Rs. 36,000 = Rs. 10,286 (approx.).
- Laxmi's share in the Goodwill = (5/7) * Rs. 36,000 = Rs. 25,714 (approx.).
- The journal entry for this transaction will be:
Radha's Capital a/c Dr. Rs. 10,286
Laxmi's Capital a/c Dr. Rs. 25,714
To Seeta's Capital a/c Rs. 36,000
This entry records the payment of Goodwill to Seeta by Radha and Laxmi in their gaining ratio.
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Radha, Seeta and Laxmi were partners sharing profits and losses in the...
Treatment for Goodwill in the given scenario:
1. Calculation of Seeta's share of Goodwill:
- Seeta's share in the profit and loss ratio is 3 out of 10 (3:10).
- Seeta's share of Goodwill would be (3/10) * Rs. 1,20,000 = Rs. 36,000.
2. Treatment of Goodwill:
- Goodwill is an intangible asset and it represents the reputation and customer base of the firm.
- In this case, Seeta is retiring, and her share of the Goodwill needs to be adjusted.
3. Treatment options for Goodwill:
a) Profit and Loss a/c will be credited by Rs. 1,20,000:
- This option is not correct because Goodwill is an asset and cannot be directly credited to the Profit and Loss account.
b) Seeta's Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio:
- This option is not correct because Seeta's Capital account is not directly adjusted for the Goodwill. Goodwill is not treated as a separate capital account.
c) Seeta's Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio:
- This option is correct because when Seeta retires, her share of the Goodwill is transferred to her Capital account.
- By crediting Seeta's Capital account with Rs. 36,000, her capital is reduced by the amount representing her share of the Goodwill.
- The corresponding debit is made to Radha and Laxmi's Capital accounts in their gaining ratio to adjust the transfer of Seeta's share of the Goodwill.
d) None of these:
- This option is not correct because the correct treatment for Goodwill is option (c).
Therefore, the correct treatment for Goodwill in this scenario is:
- Seeta's Capital account will be credited by Rs. 36,000.
- Radha and Laxmi's Capital accounts will be debited by Rs. 36,000 in their gaining ratio.
1. Calculation of Seeta's share of Goodwill:
- Seeta's share in the profit and loss ratio is 3 out of 10 (3:10).
- Seeta's share of Goodwill would be (3/10) * Rs. 1,20,000 = Rs. 36,000.
2. Treatment of Goodwill:
- Goodwill is an intangible asset and it represents the reputation and customer base of the firm.
- In this case, Seeta is retiring, and her share of the Goodwill needs to be adjusted.
3. Treatment options for Goodwill:
a) Profit and Loss a/c will be credited by Rs. 1,20,000:
- This option is not correct because Goodwill is an asset and cannot be directly credited to the Profit and Loss account.
b) Seeta's Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio:
- This option is not correct because Seeta's Capital account is not directly adjusted for the Goodwill. Goodwill is not treated as a separate capital account.
c) Seeta's Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio:
- This option is correct because when Seeta retires, her share of the Goodwill is transferred to her Capital account.
- By crediting Seeta's Capital account with Rs. 36,000, her capital is reduced by the amount representing her share of the Goodwill.
- The corresponding debit is made to Radha and Laxmi's Capital accounts in their gaining ratio to adjust the transfer of Seeta's share of the Goodwill.
d) None of these:
- This option is not correct because the correct treatment for Goodwill is option (c).
Therefore, the correct treatment for Goodwill in this scenario is:
- Seeta's Capital account will be credited by Rs. 36,000.
- Radha and Laxmi's Capital accounts will be debited by Rs. 36,000 in their gaining ratio.
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Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer?
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Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer?.
Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer?.
Solutions for Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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Here you can find the meaning of Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer?, a detailed solution for Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? has been provided alongside types of Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Radha, Seeta and Laxmi were partners sharing profits and losses in the ratio of 2:3:5. Seeta retired on 1 st June, 2016 and Goodwill of the firm is t o be valued at Rs. 1,20,000 on that date. What will be the treatment for Goodwill ?.a)Profit and Loss a/c will be credited by Rs. 1,20,000.b)Seeta’s Capital a/c will be debited by Rs. 36,000 with corresponding credit to Radha and Laxmi in their gaining ratio.c)Seeta’s Capital a/c will be credited by Rs. 36,000 with corresponding debit to Radha and Laxmi in their gaining ratio.d)None of the these.Correct answer is 'C'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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