Read the Case Study given below and answer the question.

Sterling Enterprises is a partnership business with Ryan, Williams and Sania as partners engaged in production and sales of electrical items and equipment. Their capital contributions were Rs.50,00,000, Rs.50,00,000 and Rs.80,00,000 respectively with the profit sharing ratio of 5:5:8. As they are now looking forward to expanding their business, it was decided that they would bring in sufficient cash to double their respective capitals. This was duly followed by Ryan and Williams but due to unavoidable reasons Sania could not do so and ultimately it was agreed that to bridge the shortfall in the required capital a new partner should be admitted who would bring in the amount that Sania could not bring and that the new partner would get share of profits equal to half of Sania’s share which would be sacrificed by Sania only. Consequent to this agreement Ejaz was admitted and he brought in the required capital and Rs.30,00,000 as premium for goodwill.

What will be ratio of the capitals of all the partners after the admission of new partner Ejaz?

1,00,00,000: 1,00,00,000: 80,00,000: 80,00,000

The correct answer is option 2- 1,00,00,000: 1,00,00,000: 80,00,000: 80,00,000.

New Capital of Ryan = 50,00,000+ 50,00,000(Introduced during the year) 
                                 = 1,00,00,000

New Capital of William = 50,00,000+ 50,00,000(Introduced during the year) 
                                    = 1,00,00,000

New Capital of Sania = Old capital as she did not bring additional capital, So, her new capital is 80,00,000.

₹80,00,000 should be brought by Sania but she could not. This capital was brought by Ejaz for half of her share. So, Ejaz brought ₹80,00,000. Thus, his capital = ₹80,00,000

New capital between Ryan, Williams, Sania & Ejaz = 1,00,00,000: 1,00,00,000: 80,00,000: 80,00,000.