When a partnership is liquidated,the journal entry to pay the claims of creditors would include:

Question

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When a partnership is liquidated, the claims of creditors must be paid first. The journal entry to pay the claims of creditors would include a debit to each individual creditor's account (to decrease the accounts payable balance) and a credit to Cash (to decrease the cash balance). Therefore, option B is the correct answer. Options A, C, and D are incorrect as they do not correctly reflect the accounting treatment for paying the claims of creditors during a partnership liquidation.

When a Partnership Is Liquidated,the Journal Entry to Pay the Claims