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Question: CC admits DD as a partner in business. Accounts in the ledger for CC on November 30,2001, just before the admission of DD, show the following balances:
Cash P 6,800
Receivable 14,200
Merchandise inventory 20,000
Accounts payable 8,000
CC, capital 33,000
It is agreed that for purposes of establishing CC's interest the following adjustments shall be made:
- An allowance for doubtful accounts of 3% of accounts receivable is to be established.
- The merchandise inventory is to be valued at P23,000.
- Prepaid salary expenses of P600 and accrued rent expense of P800 are to be recognized.DD is to invest sufficient cash to obtain a 1/3 interest in the partnership.
(1) CC's adjusted capital before the admission of DD
(2) the amount of cash investment by DD
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