E15-7 Admission of a Partner Pam and John are partners in PJ's partnership, having capital balances of $120,000 and $40,000, respectively, and share income in a ratio of 3:1. Gerry is to be admitted into the partnership with a 20 percent interest in the business. Required For each of the following independent situations, first record Gerry's admission into the partner- ship and then specify and briefly explain why the accounting method used in that situation is GAAP or non-GAAP. a. Gerry invests $50,000, and goodwill is to be recorded. b. Gerry invests $50,000. Total capital is to be $210,000; the partners use the bonus method. c. Gerry purchases the 20 percent interest by directly paying Pam $50,000. Gerry is assigned 20 percent interest in the partnership solely from Pam's capital account. d. Gerry invests $35,000. Total capital is to be $195,000; the partners use the bonus method. e. Gerry invests $35,000, and goodwill is to be recorded. f. Gerry invests $35,000. During the valuation process made as part of admitting the new partner, the partnership's inventory is determined to be overvalued by $20,000 because of obsolescence. PJ's partnership uses the lower-of-cost-or-market value method for inventories.