Mohit, Neeraj and Sohan are partners in a firm sharing profits in the ratio of $2:1:1$. Neeraj retires and Mohit and Sohan decided that the capital of the new firm will be fixed at $\text{Rs. }1,20,000$ and D is to bring in cash equivalent to $\frac{1}{4}\text{th}$ of this amount as his capital. The capital accounts of Mohit and Sohan show a credit balance of $\text{Rs. }82,000$ and \text{Rs. } 41,000 respectively} after making all the adjustments. Calculate the actual cash to be paid off or to be brought in by the continuing partners in total-

Let's find the required capital adjustments for the continuing partners Mohit and Sohan.(Note: The text notes "D is to bring in capital", but the question targets the total cash adjustment relating solely to continuing partners Mohit and Sohan based on the fixed capital target).New Profit Sharing Ratio between Mohit and Sohan:Old configuration: Mohit ($2$) : Neeraj ($1$) : Sohan ($1$).Neeraj retires, leaving the structural new profit sharing ratio between Mohit and Sohan as $2:1$.Required Capitals of Mohit and Sohan:Total capital of the new firm = $\text{Rs. }1,20,000$ Mohit's required new capital = $1,20,000\times \frac{2}{3}=\text{Rs. }80,000$ Sohan's required new capital = $1,20,000\times \frac{1}{3}=\text{Rs. }41,000\to \text{Rs. }40,000$ Cash adjustments comparison:Mohit:Adjusted Existing Capital = $\text{Rs. }82,000$ New Required Capital = $\text{Rs. }80,000$ Since Existing $>$ Required, Mohit is paid off = $82,000-80,000=\text{Rs. }2,000$ Sohan:Adjusted Existing Capital = $\text{Rs. }41,000$ New Required Capital = $\text{Rs. }40,000$ Since Existing $>$ Required, Sohan is paid off = $41,000-40,000=\text{Rs. }1,000$ Total Net Cash Adjustment for continuing partners combined:
$$\text{Total Paid Off}=2,000\text{ (Mohit)}+1,000\text{ (Sohan)}=\text{Rs. }3,000\text{ paid off.}$$