Use the following information to answer Questions 15 20.

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.

15. If each partner's capital account is initially set equal to net assets invested at fair market value, the entry to record the partnership formation includes the following:

a. A credit to Patels capital account for $150,000.

b. A credit to Patels capital account for $325,000.

c. A credit to Raos capital account for $500,000.

d. A credit to Raos capital account for $350,000.

16. Assume the partners specify an agreed-upon percentage in the initial partner capital, as follows: 40% to Patel, and 60% to Rao. If the bonus approach to partnership formation is used, Raos initial capital balance will be:

a. $350,000

b. $390,000

c. $325,000

d. $480,000

17. Assume the partners specify an agreed-upon percentage in the initial partner capital, as follows: 40% to Patel, and 60% to Rao. If the goodwill approach to partnership formation is used, the initial entry to record the formation of the partnership will recognize goodwill of:

a. $400,000

b. $250,000

c. $100,000

d. $150,000

18. Assume the partners specify an agreed-upon percentage in the initial partner capital, as follows: 40% to Patel, and 60% to Rao. If the goodwill approach to partnership formation is used, Raos initial capital balance is:

a. $410,000

b. $350,000

c. $400,000

d. $450,000

19. Assume the partners specify an agreed-upon percentage in the initial partner capital, as follows: 60% to Patel, and 40% to Rao. If the goodwill approach to partnership formation is used, the initial entry to record the formation of the partnership will recognize goodwill of:

a. $400,000

b. $150,000

c. $225,000

d. $375,000

20. Assume the partners specify an agreed-upon percentage in the initial partner capital, as follows: 60% to Patel, and 40% to Rao. If the goodwill approach to partnership formation is used, Raos initial capital balance is:

a. $425,000

b. $375,000

c. $525,000

d. $350,000