Cara admits Dana in her business as a partner. At November 30, 2010, prior to the admission of Dana, the records of Cara show the following:

DR CR

Cash ?

Accounts Receivable P 192 000

Merchandise inventory 288 000

Accounts Payable P 99 200

Cara, Capital ?

The following adjustments are needed in the books of Cara to establish her interest:

The allowance for doubtful accounts equivalent of 2 % of accounts receivable is to be established The merchandise inventory is to be valued at P 320,000. Prepaid expenses of P 10,400 and accrued expenses of P 6,400 are to be recognized.

Dana invests cash of P 227,280 to give him a one-third interest in the total capital of the partnership.

The capital balance of Cara before admission of Dana is:

a. P 460,240 c. P 422,400

b. P 501,000 d. P 454,560