Response:
cash 110,000 debit
land 100,000 credit
gain from disposal 10,000 credit
--to document the land sale--
accounts payable 80,000 debit
cash 80,000 credit
--to record the settlement of debts--
gain from disposal 10,000 debit
Morgan 7,500 credit
Halsted 2,500 credit
--to allocate gains from sale--
Morgan 22,500
Halsted 7,500
Cash 30,000
--to dissolve the partnership--
Clarification:
ratio 3:1 (3+1=4)
Morgan 15,000 share of 3/4 = 75%
Halsted 5,000 share of 1/4 = 25%
a gain of 10,000 from the sale is shared as follows
Morgan 10,000 x 75% = 7,500
Halsted 10,000 x 25% = 2,500
Next, we close the accounts against cash
