Extracted text: recognized in Castillo's books. The individual trial balances on Augus 3 On August 1, Castillo and Dagarag pooled their assets to form a partnership, with the firm to take over their business assets and assume the liabilities. Partners' capitals are to be based on net assets transferred after the following adjustments. (Profits and losses are allocated equally). Dagarag's inventory is to be increased by P14,600; an allowance for doubtful accounts of P3,650 and P5,475 are to be set up in books of Castillo and Dagarag, respectively; and accounts payable of P14,600 is to be before adjustments, follow: Castillo Dagarag 273,750 412,450 18,250 125,925 Assets Liabilities What is the capital of Castillo and Dagarag after the above adjustments? a. Castillo, P250,937.50; Dagarag, P281,962.50 b. Castillo, P273,750; Dagar ag, P295,650 C. Castillo, P237,250; Dagarag, P277,400 d. Castillo, P237,250; Dagarag, P295,650