Reference no: EM132834249

Problem - Car and Lam establish an equal partnership in both equity and profits to operate a used-furniture business under the name "C&L Furniture." Car contributes furniture inventory, which costs $120,000 and has fair value of $160,000. Lam contributes $60,000 cash and delivery equipment, which costs $80,000 and has a fair value of $60,000.

Required -

1) Compute the ending balance of Car's Capital account under the bonus approach.

2) Compute the ending balance of Lam's Capital account under the bonus approach.

3) Compute the ending balance of Car's Capital account under the goodwill approach.

4) Compute the ending balance of Lam's Capital account under the goodwill approach.