Chapter 12, Problem E12.22E

To determine

Accounting for Liquidation of partnership: A Partnership may liquidate or shut down its business. The process of liquidation is as follows:

• Sell all the assets of the partnership. The gain or loss arising from such sale is distributed among the partners in their profit sharing ratio.

• Pay off all outside liabilities.

• Distribute the remaining cash among the partners in the ratio of their respective capital balances.

To Determine:

Journal Entries for sale of non-cash assets, allocation of gain-loss on sale of assets, payment of the outstanding liabilities, and the distribution of remaining cash of partners in following situation:

1. Non-cash asset sold for $57,000.

2. Non-cash asset sold for $18,000.