1. Adam (A), Betsy (B) and Cathy (C) decided to form a partnership, which was founded on 01/01/2015. Adam contributed cash $20,000 and inventory with market value of $30,000. B contributed a piece of land with market value of $80,000 with unpaid mortgage in the amount of $30,000. C contributed PPE with market value of $50,000 and Cs expertise is deemed to be worth of $50,000 by all the 3 partners.

a. If ABC decided to use goodwill method to document the creation of the partnership, what are the journal entries and what are the values of capital under respective partners names (3 points)?

b. If ABC decided to use bonus method to document the foundation of the partnership, what are the journal entries and what are the values of capital under respective partners names (3 points)?

C. Assuming that every year the profit among different partners will be shared in the ration of 10%, 30% and 60%, and partners have to retain 75% of their share profits in the partnership in the case of profit. What are the balances of each partners capital by the end of each year using both goodwill and bonus method (2015 and 2016)?

c.1. The partnership made $10,000 in 2015 and had a loss of $20,000 in 2016 (Goodwill method) (5 points).

c.2: The partnership made $15,000 in 2015 and had a loss of $25,000 in 2016 (bonus method) (5 points).