Finding D's share and new profit sharing ratio:
D gets 1/4th share by taking:
- 1/8 from A
- 1/8 from B
Old ratio of A:B:C = 3:2:1 (total 6 parts)
A's old share = 3/6 = 1/2, B's old share = 2/6 = 1/3, C's old share = 1/6
After D's admission:
- A's new share = 1/2 - 1/8 = 3/8
- B's new share = 1/3 - 1/8 = 5/24
- C's new share = 1/6 (unchanged)
- D's new share = 1/4
Converting to ratio with common denominator 24:
- A = 9/24
- B = 5/24
- C = 4/24
- D = 6/24
New profit sharing ratio = 9:5:4:6
Capital adjustment:
Total capital of firm = Rs. 1,20,000
C's required capital based on new ratio = 244×1,20,000 = Rs. 20,000
C's actual capital after adjustments (given) = Rs. 30,000
Amount C will withdraw = Rs. 30,000 - Rs. 20,000 = Rs. 10,000
Since C's actual capital (Rs. 30,000) exceeds the required capital (Rs. 20,000) based on the new profit sharing ratio, C needs to withdraw the excess amount.