**Educational Content: Partnership Liquidation Accounting****Scenario:**Harry, Tony, and Liza run a partnership firm and share in the profits in the ratio of 1:3:2, respectively. In the process of liquidation, the partnership sells non-cash assets, having a book value of $83,000, for $81,000. What would be the journal entry for distribution to partners for the loss on the sale of the non-cash assets?**Options:****Option A:**- **Debit:** - Cash: $81,000 - Loss on Disposal: $3,000- **Credit:** - Non-cash Assets: $83,000**Option B:**- **Debit:** - Loss on Disposal: $2,000- **Credit:** - Harry, Capital: $333 - Tony, Capital: $1,000 - Liza, Capital: $667**Option C:**- **Debit:** - Harry, Capital: $333 - Tony, Capital: $1,000 - Liza, Capital: $667- **Credit:** - Loss on Disposal: $2,000**Option D:**- **Debit:** - Cash: $81,000 - Loss on Disposal: $2,000- **Credit:** - Non-cash Assets: $83,000Each option represents a possible journal entry to account for the loss incurred on the sale of the non-cash assets. The entries illustrate how the loss is split according to the partners' agreed profit-sharing ratio.

1. Ist and most important thing is that we have to pass entry for distribution to partners…

Harry, Tony, and Liza run a partnership firm and share in the profits 1:3:2, respectively. In the process of liquidation, the partnership sells non-cash assets, having a book value of $83,000, for $81,000. What would be the journal entry for distribution to partners for the loss on the sale of the non-cash assets?

Harry, Tony, and Liza run a partnership firm and share in the profits 1:3:2, respectively. In the process of liquidation, the partnership sells non-cash assets, having a book value of $83,000, for $81,000. What would be the journal entry for distribution to partners for the loss on the sale of the non-cash assets?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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