The Balance Sheet of Ryan and Peter Firm as at 30

question 64

Multiple Choice

The balance sheet of Ryan and Peter firm as at 30 June 2017 is given below. $\begin{array}{|l|r|l|c|}\hline{\text { Assets }} &&{\text { Liabilities }} & \\\hline \text { Cash } & \$ 15,000 & \text { Accounts payable } & \$ 15,000 \\\hline \text { Accounts receivable } & 12,000 & \text { Other liabilities } & 22,000\\\hline \text { Furmiture } & 23,000 & {\text { Partners' equity }} & \\\hline \text { Equipment } & 39,000 & \text { Ryan, capital } & 30,000 \\\hline \text { Other assets } & \underline{8,000} & \text { Peter, capital } & \underline{30,000} \\\hline \text { Total assets } & \$ 97,000 & \text { Total liabilities and partners' equity } & \$ 97,000\\\hline\end{array}$ Ryan and Peter share profits in the ratio 3:2.They have decided to liquidate the partnership with immediate effect.They sold the furniture and equipment for $72,000.Which of the following is the correct journal entry for the sale transaction?

• A) \[\begin{array} { | c | c | c | }
• \hline \text { Cash } & \$ 72,000 & \\
• \hline \text { Furniture } & & 23,000 \\
• \hline \text { Equipment } & & 39,000 \\
• \hline \text { Gain on } & & \\
• \text { disposal } & & 10,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | l | }
• \hline \text { Cash } & \$ 62,000 & \\
• \hline \text { Furniture } & & 23,000 \\
• \hline \text { Equipment } & & 39,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | c | }
• \hline \text { Liquidation account } & \$ 134,000 & \\
• \hline \text { Cash } & & 72,000 \\
• \hline \text { Furniture } & & 23,000 \\
• \hline \text { Equipment } && 39,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | l | l | }
• \hline \text { Loss on disposal } & \$ 10,000 & \\
• \hline \text { Cash } & 72,000 & \\
• \hline \text { Furniture } & & 23,000 \\
• \hline \text { Equipment } & & 49,000 \\
• \hline
• \end{array}\]

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Definitions:

Unit Value

A measurement or quantity used as a standard or fixed amount in calculations or transactions.

Multiply

To increase in number by a specific factor; in arithmetic, it is the operation of adding a number to itself a certain number of times.

Decimal

A figure that features a decimal point to signify a part of a whole.