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Ace, Boy and Cid are partners sharing profits in the ratio of 3:3:2. On July 31, their capital balances are as follows:
Ace - P700,000,
Boy - P500,000, and
Cid - P400,000.
The partners agree to admit Deo on the following agreement:
(a) Deo is to pay Ace P500,000 for ½ interest of Ace's interest;
(b) Deo is also to invest P400,000 in the partnership;
(c) The total capital of the partnership is to be P2,400,000, of which Deo's interest is to be 25%.
Problem 1: What is the capital balance of Deo after his admission?
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