Chapter 12, Problem S12.12SE

To determine

Accounting for liquidation of partnership firms:

The Accounting for partnership firms involved realization of non-cash assets and recognized the gain or loss on disposal off assets which will be apportioned among the partners. After realization of non-cash assets and the outside liabilities shall be paid off. The balance of cash needs to be ascertained for distribution among the partners capital.

It will be observed that sum of the partner’s capital balance after adjustments of every transaction shall be equal to cash balance in hand after paying off outside liabilities.

The Journal entries for the liquidation of firm.