Two sole proprietors, L and M, agreed to form a partnership on January 1, 2013. The trial balance for each proprietorship is shown below as of January 1, 2013. Click thelink at the bottom of the pageto access aspreadsheetcontaining information from both proprietors. The LM partnership will take over the assets and assume the liabilities of the proprietors as of January 1, 2013.

Discuss the following:

1. The steps required to form the partnership
2. Prepare and post the financials for LM Partnership and discuss the differences that you have with your colleagues
3. After Wednesday, consider the following: 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, 2013. Given this alternative, how does the balance sheet prepared for #1 change?

Proprietors Assets, Liabilities & Equities Cash AR Inventory Land Plant and Equipment Less: Accumulated Depreciation Goodwill Patent Total Assets AP Loan-L Owners Equity Total Liabilities & Equity L M $40,000 $15,000 $105,000 $60,000 $400,000 -$150,000 $10,000 $25,000 $10,000 $15,000 $10,000 $30,000 -$5,000 $0 $480,000 $50,000 $100,000 $270,000 $420,000 $0 $85,000 $15,000 $70,000 $85,000