Paul and Wayne equally own the PW Partnership. Paul's basis was $30,000 and Wayne's basis was $22,000 at the beginning of the year. PW Partnership had the following income and expense items:

Sales..............................................................$330,000

Cost of goods sold..............................................220,000

Guaranteed payment to Paul....................................40,000

Rent expense......................................................24,000

Depreciation.......................................................33,000

Interest expense....................................................4,000

Tax-exempt income................................................3,000

Health insurance premiums for Paul............................3,600

Health insurance premiums for Wayne.........................3,600

a. Prepare page 1 and page 4 of Form 1065 - ordinary income and separately stated items for the partnership.

b. Calculate Paul's basis in his partnership interest.

c. Calculate Wayne's basis in his partnership interest.