In the process of liquidation,a partnership firm sells its non-cash assets of 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

The entry to record the sale of assets at liquidation would be:
Cash (or Bank) Account...............$73,000
Non-Cash Assets...............................$55,000
Gain on Disposal..................................$18,000

The Gain on Disposal account is credited because it has a credit balance, and it is increased by the amount of the gain, which is the excess of the selling price ($73,000) over the book value ($55,000). Therefore, the correct choice is C.

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