Patel and Rao decide to form a partnership.Patel contributes $300,000 in cash.Rao contributes buildings and equipment with a fair market value of $500,000, subject to a mortgage of $150,000, which the partnership assumes.

Assume the partners specify an agreed-upon percentage in the initial partner capital, as follows: 40% to Patel, and 60% to Rao.If thebonus approach to partnership formationis used, Rao's initial capital balance will be

a.$350,000

b.$390,000

c.$325,000

d.$480,000