So...
(The puzzle omitted to mention that Dorothy is allowed to rearrange the cards. I don't see why this should be assumed if it isn't mentioned. After all it is assumed that David can't see which of the five cards Dorothy removes so that David won't know the value of $j$. The puzzle would be very different if David knew what $j$ was. And there's no reason, according to what the puzzle has stated, that David can't watch Dorothy put the cards in order and watch her remove precisely the $j$th card...)
The way I read this.
Let $j \equiv c_1+c_2+c_3+c_4+c_5 \pmod 5$ and $1 \le j\le 5$. Dorothy removes $c_j$.
Let $s = ( c_1+c_2+c_3+c_4+c_5)- c_j\equiv j-c_j \pmod 5$. David knows the value of $s$.
David has four cards which he will call $A_1 < A_2 < A_3 < A_4$
So the way I see David figures:
If the missing card is $c_k=x$ where he doesn't know what $k$ or what $x$, then $s \equiv k - x\pmod 5$ or $x \equiv k-s \pmod 5$ and $A_{k-1} < x < A_k$ (if $k-1=0$ of $k=5$ just ignore the non-defined $A_{term}$). He tries to solve these for $k = 1,2,3,4,5$.
Now if we relabel the numbers $1....124$ to the numbers $1..... 120$ by omitting $A_1,...,A_4$ the $x$ will get translated to $x'$ and $x'=x$ if $x < A_1$. And $x'=x-1$ if $A_1 < x < A_2$ and $x'=x-2$ if $A_2< x < A_3$ and so on.
So $s \equiv k - x\pmod 5$ or $x \equiv k-s \pmod 5$ and $A_{k-1} < x < A_k$ all be become the equation $s \equiv 1-x'\pmod 5$. where $1 \le x' \le 120$.
There are $24$ possible such $x'$s. And there are $24$ ways to arrange the cards $A_1,A_2,A_3,A_4$. Dorothy rearranges the remaining $4$ cards to indicate the which of the $24$ values $x'$ is.
.......
So for example. Let's say the cards are $21, 27, 86, 110, 114$.
Then $21+27+86+110+114 = \equiv 3\pmod 5$. So Dorothy removes the $3$rd card: $86$. Dorothy does a subtraction of $c_j - (j-1)$, in this case, $86-(3-1) = 84$. And Dorothy figures $s = 21+27+110+114= 272\equiv -3\pmod 5$ and $84 \equiv 1-272\equiv 1+3 \equiv 4\pmod 5$. Furthermore $84 = 16*5 + 4$.
So Dorothy rearranges $2127,110,114$ into the $16$th permuations. The sixteenth permutation is.. lets see... if $abcd$ through $adcb$ are the first six permutations, then $cabd$ through $cdba$ are the thirteenth through eighteenth, And $cabd$ and $cadb$ are the 13th and 14th, $cbad,cbda$ are the 15th and 16th. So we want the permutation $cbda$.
So Dorothy arranges the cards as $110,27,114,21$.
David sees those cards and sees they are arranged in order of $cbda$ and figures they are the $16$th permutation.
He adds $s=110,27,114,21= 272$. $1-272 \equiv 4\pmod 5$. And $16*5 + 4 = 84$. $84 \not < 21$. And $21 \not < 85 \not < 27$. But $27 < 86 < 110$ so David figures the card is $86$.