Two Sole Proprietors,L and M,agreed to Form a Partnership on January

question 75

Essay

Two sole proprietors,L and M,agreed to form a partnership on January 1,20X9.The trial balance for each proprietorship is shown below as of January 1,20X9.
The LM partnership will take over the assets and assume the liabilities of the proprietors as of January 1,20X9.
Required:
a)Prepare a balance sheet,for financial accounting purposes,for the LM partnership as of January 1,20X9.
b)In addition,assume that M agreed to recognize the goodwill generated by L's business.Accordingly,M agreed to recognize an amount for L's goodwill such that L's capital equaled M's capital on January 1,20X9.Given this alternative,how does the balance sheet prepared for requirement A change?

Problem 72 (continued):

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Definitions:

Recognition Memory

Recognition memory is a type of memory that enables individuals to identify previously encountered items, objects, or individuals, distinguishing what is familiar from what is not.

Depth-of-processing

A concept in cognitive psychology that describes how deeply information is encoded and thus, how well it is remembered.

Working Memory

The component of short-term memory responsible for the direct conscious processing of perceptions and language.

Long-term Memory

is the phase or type of memory responsible for the storage of information over an extended period of time.