On June 7, 2013, Cheng and Morales, two recent graduates of Upper State University, formed a computer

Question:

On June 7, 2013, Cheng and Morales, two recent graduates of Upper State University, formed a computer consulting firm. Cheng contributed an extensive, up-to-date computer installation, valued at $60,000. This equipment had been financed by a bank loan; the assumed the current balance of $28,000. Cheng also invested $4,000 cash. Morales had recently inherited a small office building, valued at $130,000 and encumbered by a mortgage debt of $42,000. Morales transferred both the building and the debt to the Cheng's extensive computer skills coupled with Morales' sales and customer service skills suggest a profitable future for the firm. They agreed to share profits in the ratio of 40 percent for Cheng and 60 percent for Morales, in part because of Morales' larger investment.
Required
Compute the balance in each partner's capital account on June 7, 2013, and record the formation entry if the:
a. Partners do not specify any capital relationship.
b. Partners agree that each is to have a 50 percent interest in capital, and they specify the bonus approach to recording the formation.
c. Partners agree that each is to have a 50 percent interest in capital, and they specify the approach to recording the formation. Goodwill
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