The LM partnership will take over the assets and assume the liabilities of the proprietors...
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Accounting
The LM partnership will take over the assets and assume the liabilities of the proprietors as of January 1, 2013.
Discuss the following:
The steps required to form the partnership.
Prepare and post the financials for LM Partnership.
Prepare the following:
Assume that M agreed to recognize the goodwill generated by Ls business, $10,000.
Accordingly, L agreed to recognize an amount for Ms goodwill such that Ls capital equaled Ms capital on January 1, 2013. Given this alternative, how does the balance sheet prepared change? Present the new LM Partnership with equal capital accounts.
Proprietors
Assets, Liabilities & Equities
L
M
Cash
$40,000
$25,000
AR
$15,000
$10,000
Inventory
$105,000
$15,000
Land
$60,000
$10,000
Plant and Equipment
$400,000
$30,000
Less: Accumulated Depreciation
-$150,000
-$5,000
Goodwill
$10,000
Patent
$0
$0
Total Assets
$480,000
$85,000
AP
$50,000
$15,000
Loan-L
$100,000
Owners Equity
$330,000
$70,000
Total Liabilities & Equity
$480,000
$85,000
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