The first entry to liquidate a partnership would probably include
A. a debit to Cash and a credit to Individual Assets Sold.
B. a debit to Cash, a debit or credit to Loss or Gain from Realization, and a credit to Individual Assets Sold.
C. a debit to Individual Assets Sold and a credit to Cash.
D. None of the above
B?
i need help with General Journal/ General leadger
To determine the correct answer, let's break down the given options and consider the basic principles of partnership liquidation.
In partnership liquidation, the first step involves selling off the partnership's assets to convert them into cash. This is done to distribute the proceeds among the partners and settle any remaining obligations.
Now, let's analyze each option:
Option A: "a debit to Cash and a credit to Individual Assets Sold."
This option suggests that the partnership records a debit to Cash and a credit to Individual Assets Sold. However, it doesn't account for any gains or losses incurred during the sale of assets.
Option B: "a debit to Cash, a debit or credit to Loss or Gain from Realization, and a credit to Individual Assets Sold."
This option, unlike Option A, includes a possible debit or credit to Loss or Gain from Realization. This approach is correct because the partnership needs to record the gains or losses resulting from the sale of assets.
Option C: "a debit to Individual Assets Sold and a credit to Cash."
This option suggests recording a debit to Individual Assets Sold and a credit to Cash. However, it fails to address the gains or losses incurred during the liquidation process.
Given the principles of partnership liquidation, the correct answer would be Option B: "a debit to Cash, a debit or credit to Loss or Gain from Realization, and a credit to Individual Assets Sold." This option accounts for both the cash received from asset sales and any gains or losses realized during the process.