Annie and Betty are partners sharing profits 60:40. A balance sheet prepared before the admission of Cathy on August 1, 2018 is shown below: Cash P96,000 Accounts Payable P178,000 Accounts Receivable...

1. How much cash should be contributed by Cathy?
2. what capital/cash settlement should be made between Annie and Betty?

Extracted text: Annie and Betty are partners sharing profits 60:40. A balance sheet prepared before the admission of Cathy on August 1, 2018 is shown below: Cash P96,000 Accounts Payable P178,000 Accounts Receivable 184,000 Annie Capital 266,000 Inventory 330,000 Betty Capital 216,000 Equipment-net 50,000 Total P660,000 Total P660,000 The terms of the agreement are that the assets and liabilities are to be restated as follows: • An allowance for possible uncollectible of P9,000 is established. • Inventories are to be restated at their present market values of P340,000. Equipment are to be restated at a value of P70,000. Accrued expenses of P8,000 are to be recognized. Annie, Betty and Cathy agreed to divide profits and losses in the ratio 5:3:2 Capital Balances of the new partners are to be in this ratio with Annie and Betty making cash settlement outside of the partnership for the required capital adjustment. Cathy is to invest cash in the partnership for her interest.