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The journal entry to record this transaction is as follows: ... SOLUTIONS TO PROBLEMS. PROBLEM 12-1 Franchises 42,000 Prepaid Rent 28,000 Retained Earnings (Organization Costs of $6,000 in 2006) NoteāNo amortization of goodwill; goodwill should be tested for impair-ment on at least an annual basis in future periods. ... ................
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