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Exercise 3-8 (Capital Balances Ratio Adjusted to profit and Loss Ratio) Balbin, Bagtas, and Banta are partners sharing 40%, 35%, and 25%. Partners' Ooriginal capital
Exercise 3-8 (Capital Balances Ratio Adjusted to profit and Loss Ratio) Balbin, Bagtas, and Banta are partners sharing 40%, 35%, and 25%. Partners' Ooriginal capital were in this ratio but on June 30, 2014, capital balances are as follows: Balbin - P240,000, 120 Bagtas - P 200,000, and Banta - P200,000. Partners want to bring capital balances into profit and loss ratio. Instructions: 1. Assuming that the capital balances are to be brought into profit and loss ratio by the payments outside the firms among partners, the total firm capital to remain the same, what cash transfers are required between or among partners and what entry would be made on the firm books? 2 Assuming that the capital balances are to be brought into profit and loss ratio by the lowest possible cash investment in the firm by the partners, what additional investments are required and what entry would be made by the firm books? 3. Assuming that the capital balances are to be brought into profit and loss ratio by the lowest possible cash investment or cash withdrawal from the firms by the partners, what additional cash investments or cash withdrawals are required and what entry would be made by the firm books
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