Partnership Formation:

Renata is the sole proprietor of a company with the following balance sheet:

Assets			Liabilities
Cash	$ 100,000		Accounts payable	$ 50,000
Inventory	300,000		Loan payable	100,000
Plant and equipment, net	600,000		Total liabilities	150,000
	________		Capital	850,000
Total assets	$1,000,000		Total liabilities and capital	$1,000,000

The cash and inventory are carried at fair value, and plant and equipment has a fair value of $650,000.

Renata enters into a partnership with Santiago. Renata contributes her company, and the partnership assumes the companys liabilities. Santiago contributes cash of $250,000. The partners agree to share capital and profits in a 3:2 ratio.

Required:

Prepare the journal entries of the partnership at the date of formation using:

1. The bonus approach
2. The goodwill approach