When a partnership is liquidated, the journal entry to pay the claims of creditors would include a debit to

A. Cash and a credit to each individual creditor.

B. each individual creditor and a credit to Cash.

C. each individual partner's capital account.

D. each individual partner's capital account and a credit to Cash.

Question

Business

Leonel

7 June, 23:09

When a partnership is liquidated, the journal entry to pay the claims of creditors would include a debit to

A. Cash and a credit to each individual creditor.

B. each individual creditor and a credit to Cash.

C. each individual partner's capital account.

D. each individual partner's capital account and a credit to Cash.

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Answers (1)

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Bruiser · Answer 1

When a partnership is liquidated, the journal entry to pay the claims of creditors would include a debit to:

B.) each individual creditor and a credit to cash.

When you liquidate a partnership, liabilities must be paid off before partner's investments can be returned to them. In this way, all creditors will be satisfied even if the partner's capital experienced a loss.