The capital balance for Kate is $500,000 and for Cole is $1,500,000. The two partners share profits and losses in a ratio of 25% for Kate and 75% for Cole. Johnny invests $1,000,000 into the partnership for a 30% stake. The bonus method is to be used.

A.) Compute the bonus

B.) Compute the capital balances of each partner after Johnny is admitted to the partnership.

C.) Prepare all necessary journal entries.

D.) Re-compute parts a, b, and c using the goodwill method instead.