Thirty years ago, five mechanics formed a partnership and established an automobile repair shop. Two of the partners, Decker and Groth, are now retiring. The other three partners, Farmer, Wang, and Lux, are continuing the partnership. The original agreement called for an equal division of income. The remaining partners plan to continue this arrangement. The following balance sheet is prepared for the partnership as of the retirement date:

All partners agreed that Decker should receive $125,000 for his interest in the business and Groth should receive $100,000. Farmer proposed the bonus method for recording the retirements. Wang objects to this method and suggests the partial goodwill approach.
Required
a. Prepare the journal entry to record the retirements under the bonus method.
b. Prepare the journal entry to record the retirements under the partial goodwill approach.
c. Why does Wang object to the bonus method of accounting?

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60,000 Loan payable ...._.. . . 80,000 Inventory of parts....80,000 Capital Decker... 100,000 80,000 60,000 Capital-Farmer.... 140,000 15,000 Building, net . . .. Land 50,000 Capital -Wang Capital Lux. Total assets ........$660,000 Total liabilities and capital ..$660,000