Aman, Baman and Chaman are partners in a firm sharing profits in the ratio of 3:2:1. Daman is admitted into the firm for 1/4th share in profits, which he gets as 1/8th from Aman and 1/8th from Baman. Daman is to bring in cash equivalent to 1/4th of the total capital of the firm as his capital. The capitals of Aman, Baman and Chaman after all adjustments related to revaluation profit, goodwill and reserves, are Rs. 40,000, Rs. 35,000 and Rs. 30,000 respectively. Calculate the capital brought in by Daman on the basis of old partners' capital balances.

Rs 35,000

Correct answer: Option (4) → Rs 35,000

Concept: When the new partner’s capital is a proportion of the firm’s total capital based on the adjusted capitals of old partners, first gross-up their combined capital to the whole, then apply the new partner’s share – per Reconstitution of a Partnership Firm – Admission of a Partner.

Daman’s share = 1/4, so the old partners together retain 3/4.
Combined adjusted capital of old partners = 40,000 + 35,000 + 30,000 = Rs 1,05,000, representing 3/4 of the firm’s capital.
Total capital of firm = 1,05,000 × 4/3 = Rs 1,40,000.
Daman’s capital = 1,40,000 × 1/4 = Rs 35,000.