A, B and C are partners in a firm sharing profits in the ratio of 2 : 2 : 1. D is admitted for 1/5^th share in profits. He will bring ₹35,000 as his capital in the firm. The capitals of A, B and C after all the adjustments are ₹40,000, ₹35,000 and ₹30,000 respectively. What will be the share of goodwill of D?

₹7,000

The correct answer is Option (4) - ₹7,000.

D's capital = ₹35000 for 1/5th share.
On D's share base total capital of the firm = 35000 X 5
                                                             = ₹175000

A, B and C after all the adjustments are ₹40,000, ₹35,000 and ₹30,000 respectively.
Total capital of A, B & C = 40000 + 35000 + 30000
                                   = ₹105000

Goodwill = 175000 - ( 105000 +35000)
             = 175000 - 140000
              = ₹35000

D's share in goodwill = 35000 x 1/5
                               = ₹7000