D, A and T are partners with capital balances of P392,000, P1,365,000 and P595,000 respectively, sharing profits and losses in the ratio of 3:2:1. E is admitted as a new partner bringing with him expertise and is to invest cash for a 25% interest in the partnership which includes a credit of P367,500 for bonus upon his admission.

1. How much cash should E contribute?

a. 661,500 b. 1,050,000 c. 294,000 d. 787,500

7. If A is the total capital of the partnership before admission of a new partner, B is the total capital of the partnership after the investment of a new partner, C is the amount of the new partners investment, and D is the amount of capital credit to the new partner, then there is:

a. A bonus to the new partner if B = A + C and D < C.

b. A bonus to the old partner if B = A + C and D > C.

c. Both a and b are correct

d. Both a and b are incorrect.