Arrange the steps of adjustment of partner’s capital on the admission of a new partner in sequence. 1. Calculate the adjusted capital of old partners. 2. Calculate the proportionate capital of a new partner. 3. All adjustments should be made. 4. Calculate the total capital of new firm. Select the correct answer:

The correct answer is: D. 3, 4, 2, 1

Here is a brief explanation of each step:

1. Calculate the adjusted capital of old partners. This is done by taking the old partners’ capital balances and adjusting them for any changes that have occurred since the last partnership agreement was signed. For example, if a partner has made a capital contribution since the last agreement was signed, their capital balance would be increased.
2. Calculate the proportionate capital of a new partner. This is done by dividing the total capital of the new firm by the number of partners. For example, if the new firm has a total capital of $100,000 and there are three partners, each partner’s proportionate capital would be $33,333.
3. All adjustments should be made. This includes any adjustments to the old partners’ capital balances, as well as any adjustments to the new partner’s capital balance. For example, if the new partner is bringing in a new asset to the partnership, the old partners’ capital balances may need to be adjusted to reflect the new asset’s value.
4. Calculate the total capital of new firm. This is done by adding up the adjusted capital balances of all the partners. For example, if the old partners’ capital balances are $100,000, $200,000, and $300,000, and the new partner’s capital balance is $400,000, the total capital of the new firm would be $800,000.