Max, Nat and Roberta formed a partnership to operate adry-cleaning business. They agreed to share initial capital andsubsequent income in a 5:3:2 ratio. Each partner’s contributions tothe new venture are listed next.
Max: $25,000 cash, dry-cleaning equipment worth $180,000 and theability to keep the equipment in good operating condition.
Nat: $15,000 cash and extensive experience in the dry-cleaningbusiness.
Roberta: $20,000 cash and a 2-year $75,000 note, payable to thefirm, with 3 percent interest on the unpaid balance.
(a) Record the formation using the goodwill approach.
(b) Record the formation using the bonus approach.
