In the process of liquidation,a partnership firm sells its non-cash assets with a book value of $55,000,for $73,000.Which of the following will be included in the entry to record the sale of assets at liquidation?
A) Gain on Disposal will be credited by $73,000.
B) Gain on Disposal will be debited by $73,000.
C) Gain on Disposal will be credited by $18,000.
D) Gain on Disposal will be debited by $18,000.

Question

Quizplus · Accepted Answer

In the process of liquidation, the entry to record the sale of assets will include a credit to cash or accounts receivable for the amount received, in this case, $73,000. The book value of the assets sold was $55,000, which means that the partnership had a gain on disposal of $18,000. To account for this gain, the entry will also include a credit to gain on disposal for $18,000. Therefore, the correct choice is C. Gain on Disposal will be credited by $18,000.

In the Process of Liquidation,a Partnership Firm Sells Its Non-Cash