Partnership has the following balance sheet:

	BV	FV
Cash	1,000	1,000		Accounts Payable	9,000
Accounts Receivable	4,000	3,800		Mortgage-Land	80,000	89,000
Inventory	10,000	9,200
Equipment (net)	116,000	346,000		Capital-I (50%)	27,000
Land	12,000	200,000		Capital-II (40%)	21,600
	143,000	560,000		Capital-III (10%)	5,400	54,000
						143,000

a. Partner II departs by selling his interest to IV for $288,400 (the interest's fair value). Prepare the required journal entry if:

i. I and III object to IV as a partner

ii. I and III consent to IV as a partner

b. Partner II departs by having Partnership redeem its interest for its fair value ($288,400), receiving $88,400 and Land. Partnership borrows $90,000 from Bank (note payable) to facilitate the redemption.

i. Assume Partnership uses the bonus method.

(1). Prepare all required journal entries related to the loan and to preparing for Land's distribution (the only entries that don't appear here are: 1) that which accounts for the "bonus," and 2) that which actually distributes Land).

(2). Prepare the revised balance sheet.

(3). Prepare the remaining journal entries required to redeem Partner II's interest.

(4). Prepare the revised balance sheet.

ii. Assume Partnership uses the goodwill method.

(1). Is goodwill present?

(2). Prepare all required journal entries except for the actual redemption.

(3). Prepare the revised balance sheet.

(4). Prepare the required journal entries for the redemption.

(5). Prepare the revised balance sheet.